Strong Pound decimates pig industry

By Peter Crichton

AS the last year of the century draws to a close UK pig producers are left to reflect on another 12 months of negative returns during which a rising number have been forced out of the industry.

Probably the main culprit remains the strength of the Pound. At the start of the year the exchange rate stood at DM2.76, and this rose relentlessly to hover about DM3 during the summer, to hit DM 3.14 in December.

As a result the UK pigmeat market has been consistently undercut by most of the major EU players throughout the year during a period when the value of the Pound rose by 15%.

Although the GB AESA kicked off the year at 68.7p/kg since then it has operated between a fairly narrow band, peaking at 87.1p, from a low of 64.7p/kg in early February.

According to Signet, the average breeder/feeder production cost for bacon pigs is now 83.6p/kg which means that apart from a few summer months all breeders have been operating at a loss for the remainder of the year.

Weaner prices have also tracked finished pig returns with the Farmers Weekly 30kg spot price 12 months ago averaging £18.50/head.

This rose to £27.25 in March, peaking at just over £30 in April and sliding back to finish the year at where it started 12 months earlier.

Despite a wide number of mergers and amalgamations on the feed, marketing and promotional fronts as well as feed scares, none of these seem to have yet filtered through to producers in the form of better prices.

At the same time the British Pig Industry Support Group have staged many rallies, marches and protests to try and draw attention to the plight of the UK industry and the lack of point of sale differentiation between home produced and imported products.

In February Avonmore (now Glanbia) handed all their pig buying over four marketing groups and promised to stick to an “all for one and one for all” monthly fixed price.

This lead to all sorts of secondary deals being struck between the four groups and producers during times of shortage and surplus and has failed to bring the stability to the market place planned at the outset.

United Pig Marketing Ltd (UPM) was set up in July to combine the resources of nine of the major marketing groups (G9) but has also failed in most producers eyes to have any significant overall effect on the market.

Since then BOCM Pauls has taken over the marketing arm of UPN Porcofram and Dalgety has been gobbled up by feed giants ABN.

However, these mergers have also been greeted with a “larger orchestra – same tune” response by many producers.

Recent trends are showing a swing back to some independent producers marketing their own pigs direct rather than group selling because of the weakness of this system.

BPISG members left no stone unturned in their quest to bring media attention to the plight of its members.

The January pig farmers march in London saw the burning of the Danish flag outside Downing Street followed by supermarket and distribution centre blockades up and down the country.

Any abattoir suspected of handling live Irish pigs was targeted and the same applied to meat processors who used high volumes of imports.

In June the Dioxin scandal hit the headlines and provoked further protests against imports including a farmer blockade at Felixstowe Docks causing chaos at the UKs major container terminal.

In September two live sows in stalls banned in the UK were delivered to the Houses of Parliament and further pigs in stalls demonstrations took place at the Tory party conference and at many other venues.

Following the French “sewage in feed” scandal in the autumn, pig muck was dumped outside MAFF offices and at selected supermarkets throughout the UK. BPISG organisers have promised that these activities will continue into the next Century if necessary.

On the industry side the National Pig Association was set up to merge the interests of the NFU and the British Pig Association and British Pig Executive established to handle promotion.

One plus factor is the recently announced scrapping of the producer contribution to the Meat and Livestock Commission 65p promotional levy.

1999 also saw Signet, the consultancy arm of the MLC dropping its biggest “clanger” of the year when its April prediction was that prices would rise to 100p/kg deadweight by August and 115p by the end of the year.

As one observer commented: “They omitted to mention which year they were referring to.” As a result of this Signet has since announced it will not be making any further price predictions for the time being.

The facts on retail attitudes during the year towards UK pigmeat are starkly set out in the latest survey of 440 supermarkets.

This states that there has been no improvement in the use of the Quality Standard Mark, and Tescos sales of UK bacon have fallen from 70% in April to 48% now.

Despite the farmgate to retail price spread falling slightly from 411% to 372% over the year this compares with just 286% in 1996.

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

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