Wal-Mart takeover worries pig men

By Peter Crichton

THE proposed Wall-Mart takeover of Asda – the third-largest supermarket in the UK – has been greeted with apprehension by the countrys pig farmers.

Wal-Mart is notorious throughout the USA for its “pile-it-high-and-sell-it-cheap” policy. In the cutthroat US food retail market, Wal-Mart trades on margins of just 4%.

UK pig producers fear that if the company – the worlds biggest retailer – starts a price war over here, all the major UK supermarkets will be looking to cut the prices paid for pigmeat to preserve their margins and remain competitive.
<>
At a time when the farmgate-to-retail gap is at last starting to shrink, a price war could be the last straw for many producers.

Another feature of the current flat home demand for pigmeat is that 30kg weaner prices have hardly moved, with most ex-farm weaners traded at no more than £26 per head, £6 below production cost.

The only bright light in the selling ring has been current strong demand for cull sows which, in spite of the strength of the Pound, has held up well in the 58-62p/kg deadweight range. Not only is this a signal of perhaps firmer prices to come in the EU market in the weeks ahead, but of dwindling supplies available in the UK.

Provided summer prices can be maintained at current levels and numbers continue to contract, many pig traders believe that this autumn will herald a revival in prices.