By Peter Crichton
PIG industry leaders claim that the collapse in prices across the sector will spell the end of the UK business.
The current crisis is the worst for 60 years. Pig farmers say that unless there is an immediate upturn in demand for UK pigmeat, any recovery will come too late for many breeders.
More than 1000 desperate pig farmers have already voted with their feet and picketed Immingham Docks last Tuesday (12 August). Immingham is a major destination for daily pigmeat imports from the EU.
Profits on finishers are also under great pressure. But under the “pass back” principle, pig breeders are the ones bearing the ultimate losses because finishers are trying to preserve profits by paying less and less for replacement store pigs.
With all breeders operating at huge negative margins, only those with large financial resources will be able to see the crisis through. The Meat and Livestock Commission has said that a collapse in continental prices has added to the downward spiral in this country.
A weaker Pound would help to level the pitch as far as UK producers are concerned. But even Sterling fell 40 pfennigs to DM2.5 against the Pound, home producers would still be left with a net return at least 15% below production costs.
The big banks are reported to be pressuring their pig-farmer customers. But they have also indicated that they will stand those customers who have good financial track record.
Trade talk is that a slight price recovery may occur in September. That is may see in the lighter weight range as the typical High Street “Shop” pig weighing 55-65kg deadweight generally sees a better uptake.
Seasonal trends indicate more of a price spread between the weight ranges as Autumn approaches and lighter pigs are less vulnerable to competition from heavier imported carcass weights and cuts.
Pig analysts advise producers who are prepared to market lighter pigs to fill this niche in an attempt to help their cash flow and cut their losses.