Pig scheme covers costs and adds profit

26 February 1999




Pig scheme covers costs and adds profit

By James Garner

ASDA is introducing a Cost + scheme for pig producers which will cover costs of production and provide a profit.

It is planning to extend the scheme to beef cattle producers.

Speaking at Asdas first regional listening conference in Crick, Northants, Brian Haigh, buying controller for fresh meat, bacon and sausages, said it was evaluating the Cost + scheme for pig producers, with trials starting last week.

The scheme, which will guarantee to meet at least the cost of production, is being tested by 19 Scottish pig producers and if successful will become nationwide within six months.

"We are currently learning how to run the scheme and what the various costs involved are. Once we establish what the true cost of production for these producers is, and what other costs are involved, such as processing and retailing costs, we shall know what price we can pay producers including a profit," said Mr Haigh.

"We want to leave producers some profit as this scheme is for the long term, including both lean and good years. However, we want to encourage an economical price which gives all three parties a profit."

Mr Haigh said the scheme was not a ploy to cut producers margins further. "We believe that to develop and grow the market both producers and buyers need to be open with each other."

The pig scheme could be forerunner for a Cost + scheme for beef said buying manager, Tim Coulman, but he was unwilling to commit to a timetable.

"We have run this scheme successfully for potato growers for two years and they seem entirely happy."

The contract detail for pigs is still being assessed although it should be in place within six months, said Mr Haigh. But he warned that setting prices correctly, so producers were rewarded for being efficient but remained competitive, was important.

Despite Asdas enthusiasm, some producers remain sceptical.

Roland Earl, who farms at Biggin Grange, Oundle, has 200 dairy cows and fattens 90 British Friesian bulls a year, selling mainly deadweight, said: "This scheme would never make me a rich man because Asda has to improve margins because it is in business, too. It is laudable that Asda has stuck by British beef, but in the end it is pounds, shillings and pence that usually wins the day and that might not be to the producers benefit."

Concerns about whether the scheme could work for beef were expressed by suckler producer Fran Stamper, of Salome Lodge, Huntingdon. "Different beef systems have different costs, making it difficult to organise. But we might have to be involved if they are going to buy our cattle."

Some producers welcomed the initiative, including Robert Cross, Mickle Farm, Aston Flamville, Hinckey, who has 90 suckler cows. He finishes up to 60 bulls a year and some heifers, selling mainly live in Rugby market.

"We might be interested. I am not bothered about Asda knowing more about our business because they are willing to help us. A partnership arrangement might be a way forward in future. It is important to know what they want us to produce, and for them to understand what we are doing," he said.

Austin Knight, Southern Wells Farm, Oundle, who farms 120 Limousin cross cows and finishes up to 400 cattle a year, felt it was an inevitable development: "I do not know whether it is a good thing or not." &#42

ASDACOST +

&#8226 Cover production costs.

&#8226 Long-term stability.

&#8226 Openness.


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