Continued pig glut means prices can only drop

By Peter Crichton

DESPITE an increase of 40% in UK sow slaughterings, finished pig numbers are still high at 323,000 per week compared with 309,000 in the same period of 1997.

With extra supplies in the run-up to Christmas and contract pigs being pulled forwards, trade analysts believe that prices can only go one way, downwards.

Many breeders are therefore facing a bleak Christmas, with prices still 30p below break-even costs, which converts to a loss of up to £21 per pig leaving the farm gate.

With retail margins still high and a 60% reduction in pig prices compared with only a 10% price drop at the retail end, more militant action against the large multiple retailers is on the cards.

Those producers who have exhausted all their financial reserves and will have to quit the industry are faced with collapsing cull sow prices due to the loss of the valuable Russian market.

Cull sow values have slipped to a mere 19p/kg liveweight. A year ago, cull sows were traded at 50p/kg, and the current price translates to about £35/head compared with £100/head in 1997.

Although the UK AESA recorded a rise of 0.92p/kg for the week ending 2 November to stand at 68.44p, with spot prices falling it is expected to follow suit in the weeks ahead.

Early predictions from the MLC and Grenville Welch of the BPA of 80p by the end of the year now appear to be unattainable, and the latest quotes are suggesting next June as a possible brea- even date, which will be too late for many in the industry.

The recent £120 million aid package announced by the agriculture minister, Nick Brown, was greeted by hard-pressed hill farmers as of some help. But there was nothing in his announcement to help the near-bankrupt pig industry.

The last time any direct financial help was provided by the Government was a 5.5p/live kg subsidy paid way back in 1974, and it seems unlikely that help of this type would be available, especially since it could breach EU rules.

Store pig prices have also been hit by the current slump, with 30kg weaners trading at about £17.50/head against a Signet-based production cost of £32/head. The first signs of a downturn in overall UK pig numbers are now being seen in a slight reduction of available store pig supplies, which could start to impact on the finished pig market in three months time.

• Peter Crichton is a Suffolk-based pig farmer offering independent valuation and consultancy services to the UK pig industry