CYCLES have an upside and a downside. Talk to pig farmers and theyll all tell you the same thing at the moment – were on the downside.
Despite the recent price tumble, previous expansion in the breeding herd is still in the pipeline. This will take clean pig slaughterings to 15.5m in 1998, compared with 15m in 1997.
Europe-wide, its a similar picture with a 3% rise in production forecast.
Another 0.5kg increase in carcass weights is also expected as farmers, faced with lower prices and contract changes, push stock to heavier levels.
In a business such as this, where the supply and demand equation is so finely balanced, this doesnt bode well for prices.
According to the Meat and Livestock Commission, deadweight values will spend much of 1998 below 1997 levels, when about 110p/kg was the average. For some farmers this could be the final straw, with 100-105p/kg often seen as the minimum break-even point. The biggest year-on-year differential is likely in the summer, with no repeat of the rapidly-rising summer trade expected.
Meanwhile the prospect of the stall and tether ban will mean extra costs for some producers. Once again, many will be left hoping for a bumper grain harvest to push feed costs down.
Pig producers have, however, not suffered at the hands of the strong £ sterling as much as other sectors.
Pork exports are expected to increase 15% to 171,000t in 1997, with supply shortages on the Continent seen in the wake of the classical swine fever outbreaks, which devastated Dutch production.
Although it will now be difficult to maintain this export momentum, as Continental supplies recover, therell be less pressure from imports, as domestic prices make this country a less attractive market.
Looking further ahead, the latter part of 1998 could see a slow down in slaughterings as contraction in the breeding herd filters through. Perhaps then pig farmers will be talking about the upside of the cycle.n