Welfare slaughter rates shock pig business

By Peter Crichton

UK pig producers have reacted with shock and disbelief at the savage cuts announced in the welfare scheme slaughter rates on Thursday (26 April).

After Nick Browns initial announcement in the House of Commons that he planned to “change the rates” paid under the scheme from Monday (30 April), there was widespread confusion in the industry over what the new payment levels would be.

His announcement was that cull sows would be paid out at 80% of market value and other grower and finisher pigs at 70%.

At that stage, many producers assumed that these percentage reductions would be applied at the former fixed rates of 75 per sow and 15+50p/kg, with a 70 maximum.

However, when the new rates were published on Friday (27 April) they painted an entirely different picture.

The new cull sow rate is a flat-rate 30 and the pig rate is 12 per head+55p/kg, capped at 50 per head.

NPA chairman James Black has hit out at these new payments and claimed that they bear no relation to current non-foot-and-mouth corrupted market prices.

For example, the cull sow price in the week commencing 19 February when foot-and-mouth was first detected was 70p/kg, equivalent to 90 for the average sow.

The new scheme price is just 33% of this figure, and not 80% as claimed by the Minister.

Finished pigs are trading at an average of 100p/kg deadweight for a heavy baconer.

This puts an 80kg deadweight pig at 80 whereas the scheme maximum value is a mere 62.5% of this.

However, producers who have overstocked pigs locked up in controlled areas are reported to have large numbers of overweight 120kg-plus pigs still in a queue for the welfare scheme, and booked in when the ceiling price was 70 per head.

There are very few abattoirs in these infected areas interested in taking heavy pigs under the new “round mark” scheme.

Producers therefore stand to receive no more than 50p/kg deadweight for 120kg-plus pigs, and are estimated to be looking at losses of between 20 and 30 per pig produced.

Regional NPA manager Ian Campbell said early on Friday (27 April) that these new prices were even harder to swallow because he claimed that there had been “nil consultation” beforehand.

Because of the loss of the cull sow market due to foot-and-mouth disease the outlook for all surplus sows and boars looks bleak and there will be a knock-on effect for breeding companies too.

In the past, producers had relied on cull sow payments of about 90 per sow to pay for between half to three quarters of the cost of replacement gilts.

At 30 there is little chance for them to even consider a replacement programme and breeding companies are facing mounting financial problems as a result.

Trade sources believe that large numbers of maiden gilts will be slaughtered and this will further add to the pile of unsold manufacturing grade pigmeat in the system.

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