Industry in crisis as pig prices hit a 60-year low

31 July 1998

Industry in crisis as pig prices hit a 60-year low

By Robert Harris

PIG prices have slumped to their lowest level for more than 60 years, bringing the industry to the point of collapse, with many producers expected to quit in the face of mounting losses.

The Adjusted Euro Spec Average price was 82.27p/kg deadweight, over 3p down on the week and almost 40p down year on year.

"Disaster is staring the industry in the face," says BPA chief executive, Grenville Welsh. He reckons at the average contract price of 84p/kg deadweight, minus levy and inspection fees, producers are losing £13 a pig.

At this weeks spot market price of 55p/kg, the 30% of producers using live auctions are losing £30 a pig. And the weaner price has halved to average £15 a pig.

Prospects are hideous, says independent consultant and Suffolk pig farmer Peter Crichton. "Prices are the lowest since the great depression. Every breeder producer is selling at a loss. Some farmers are destroying pigs when they are born."

Main causes of the price crash are overproduction in the UK and Europe and the strong £, says Mick Sloyan of the Meat and Livestock Commission.

Exports, mainly as pigmeat cuts like shoulders and bellies, have climbed with UK production. Levels are up 9% this year to 191,000t, driven by the need to balance UK cuts. "But once lower European prices are converted back to sterling, we get far less for our exports."

Although the MLC forecasts that pork imports will rise by just 3.5% to 146,000t this year, and bacon imports will remain almost static at 230,000t, the strong £ means such supplies are extremely cheap, further pressurising the market.

The stall and tether ban has also added £220m to farmers bills, raising the cost of production to well over £1/kg for many producers, says Mr Welsh. And the meat and bonemeal ban is costing £46m a year in offal disposal and replacement feed costs.

The outlook remains gloomy. Sterling looks set to remain strong, and European pig numbers high. The Asian crisis also means American producers are turning to Europe, Mr Crichton notes.

Although UK pig numbers are falling, it is unlikely to help much. "British producers think fewer pigs will mean a better price," says Mr Crichton. "But if the EU price remains on the floor, buyers will simply import primal cuts, and mothball slaughtering facilities."

The main hope, experts agree, is for UK pigmeat to be promoted on the back of welfare reforms. According to the MLC, the UK pigmeat market is only 78% self-sufficient. But placing more UK product on supermarket shelves is likely to be tricky.

Some retailers continue to sell cheap imported pigmeat produced to lower standards than UK law demands, says NFU pigs committee chairman, Graham England.

"Some retailers have remained loyal, offering shoppers the choice of high-welfare British product. But others have dumped us completely. So all pricing is to the lowest common denominator: Imported meat."

Up to half of UK producers are expected to quit in the next year, says Mr Crichton. That option is proving more costly, too; cull sow values have crashed to average 20p/kg, down from last years high of 90p, with further falls likely.

lContinentals fare no better: p23. &#42

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