Cut in pig costs is crucial
Cut in pig costs is crucial
By Emma Penny
PIG producers struggling to survive in the current crisis should concentrate on financial management rather than production, according to a MLC document launched last week.
Speaking at the launch of Weathering the Storm, MLC technical specialist Colin Baldwin warned that too many producers still concentrate on physical rather than financial performance. "The emphasis must change. Short-term survival tactics are different from long-term plans."
Among eight pages of advice in the document is a forecast that the pig price will creep up to 72-78p/kg deadweight by December and will recover to 88-94p/kg deadweight by March next year.
Pig strategy manager Mick Sloyan said the recovery will be due to declining UK production and a strengthening of the EU price when the impact of private storage aid schemes, which started this week (Mon, Oct 5) become apparent.
"There are a lot of frightened producers out there, and there are several thousand on a knife-edge. Farmers are still losing £1m a day, and have to manage their herds through the next six months to survive. This document should help identify areas for cost cutting and in presenting a case to put before bankers, suppliers and financial institutions."
Responding to criticism that the launch of the document was too little and too late, communications manager Bob Bansback said that the MLC had been providing advice to producers throughout the crisis, but that the booklet systematically pulled all the information together.
Mr Baldwin explained that a key requirement was to know cost of production. "Look at the things you are paying out for, and work out costs. A bank is more likely to have confidence in you if it thinks you can manage the financial situation.
"Work out cashflow on a six and 12 month basis, and update it regularly. Dont split costs equally by 12 when you may have to pay in one or two instalments as that will be when cash demands are at their greatest. Reschedule payments so that they are more manageable."
He suggested cutting costs over the short-term by looking at feeding critically. "Consider alternative feeds; replace 1kg dry sow feed with 7-8kg potatoes or 4.5-5kg good quality silage where they are available on-farm.
"Scrutinise vet costs – but talk to your vet before you get too radical. Sick, unhealthy pigs should be taken out of the system sooner rather than later."
Rescheduling tax demands could help improve cashflow. "An early approach to the Inland Revenue – before the tax demand appears – is the best option.
"Sell assets where you can to improve cashflow, reschedule borrowings, remembering that merchant credit is often more expensive than other sources. Ensure that you are obtaining maximum return on your pigs – use available computer software to match abattoir requirements with what you produce," he advised. *
PIGSURVIVAL
• Analyse financial performance.
• Scrutinise and cut costs.
• Price recovery by March 1999.