Positive reaction to first national pig price guide
By Robert Harris
PLANS for a nationwide guide price for pigs became reality last week with the launch of the Price Intelligence Group (PIG).
The idea, mooted by a group of East Anglian farmers, aims to give producers more input into the spot pricing system.
The group provides producers and abattoirs with a weekly guide price, below which stock is unlikely to be released for sale. Last Fridays value for a typical baconer sold on a euro-spec basis was set at 100p/kg deadweight.
The price is published on the National Pig Associations web-site (www.npa-uk.net) each Friday and is transmitted by text message to subscribers.
"We are not trying to set up confrontation with the buyers, nor are we trying to fix a market price," says a spokesman. "We are trying to introduce some compromise when price discussions are taking place."
He admits that many meat traders are in a tight spot, with margins being squeezed. "But they must also understand that we have a bottom line, too, and if farmers consistently sell below it there wont be any pigs left. This way, abattoirs should have some scope to try to sell their products for more, rather than less."
All participants remain free to sell pigs to the outlet of their choice, but are advised not to sell for "significantly less" than the base price.
If the spot price rises, that will also support the adjusted euro-spec average price on which contract prices are based, he adds. Spot quotes during this week were at or slightly above the 100p/kg dw mark, though contract quotes lagged by a few p/kg.
Meat traders point out that the new system will only work if the base price is realistic – and the initial 100p level is, says Howard Judge, of Spalding-based Geo Adams & Sons. Provided that remains the case, he believes it could provide useful information for farmers.
But the UK market remains dominated by European pig prices and currency fluctuations, he adds. "Its a real juggling act to balance the books. We cant give any more for pigs if the meat is not worth any more. I am desperate for prices to reach 105p/kg so producers are back in the black.
"But prices in Europe have dropped recently, no one has exported a clean pig since the export ban was lifted and thats a big chunk of the market gone."
Pressure on the Continental market has also hit cull sow values, which are trading at 50p/kg dw into UK abattoirs – 10p less than the level recently predicted by some buyers. *