Pig price standard out of step?

By Peter Crichton

PIG producers are questioning inconsistencies in the calculation of the all-average pig price (AAPP), which continues to fall behind spot quotes.

This week, although spot prices have surged ahead, the UK adjusted Euro-spec average price only put on 0.12p, to stand at 96.03p/kg.

Spot quotes for baconers have seen an industry-wide base price close to 103p/kg, with most plants bidding 103p-106p/kg.

Lighter pigs are also expected to earn a significant premium, with porkers worth up to 114p/kg and most mid-range cutters averaging 107p/kg.

According to the Meat and Livestock Commission, the UK AESA is based on a sample of 40,000 pigs out of a weekly kill of over 200,000.

This 20% sample, on which most pricing is calculated, includes around two-thirds paid for on the Euro-spec basis.

Due to the “self-tracking” nature of the AAPP, price movements are generally less volatile than the spot market.

And the MLC claims it is generally one or two weeks before contract-formula pig prices begin to move in the same direction, although the same also applies in reverse.

But missing from the equation are auction prices, following the closure of all live markets earlier this year.

Although live auctions only accounted for around 5% of all pigs slaughtered prior to foot-and-mouth, they still had a significant influence on the way in which the AAPP was calculated.

Requests are in the pipeline for returns from major producer groups, who handle a large proportion of the weekly kill, to form part of the AAPP calculations.

This should provide a more representative sample of UK finished pig prices.

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

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