The UK’s multiple retailers appear to be sticking to their pledge to support British pork, despite the price differential for finished pigs between here and the rest of the EU, according AHDB senior analyst Stephen Howarth.
Speaking at the AHDB Outlook conference in London on Wednesday (February 11), he said the differential between UK and EU pig prices was at its highest in living memory, and had been in that position for almost a year.
“Normally this would lead to cheaper Continental imports being sucked in, leading to an adjustment in prices,” he added, “but so far, this has not happened, in part, it is believed, due to the pledge taken by retailers and food service firms to stock British following the horsegate scandal.
“The majority of those organisations seem to have stuck to the pledge and are still stocking their shelves with British product.”
Mr Howarth said it was more important than ever for all those organisations to stick to their pledge.
“Despite there being a huge differential in price, the amount pig producers in this country are being paid has fallen below the cost of production,” he added. “With our forecasts showing that there will be more pork available this year, demand for British pigs will need to be stronger for the price decline to reverse.
“However, pork now represents great value for the consumer, with UK pigs having fallen in price by more than 15% since the summer.”
Stewart Houston, who chaired the pig and poultry breakout session at the AHDB event, said that BPEX would be marking the approaching second anniversary of horsegate with a media campaign to remind retailers why they should continue to support British pork.
Production estimates
Mr Howarth predicted that like 2014, pig production, pork imports and pork exports would all increase during 2015 leaving more supplies available for home consumption. Unfortunately, simple supply and demand economics meant this would depress prices.
“We need to see demand response from consumers if we’re to get an increase in prices,” he said.
The increase in pork production in the UK was due to a consistant growth in productivity of the UK herd, which was seeing regular year-on-year increases in the numbers of pigs sold per sow. The figure of 20.5 pigs/sow achieved in 2010 had now increase to about 23.5 pigs/sow, and projections saw this rising to 25.5 pigs/sow by 2017.
On top of this, Mr Howarth suggested cheaper feed prices had resulted in pig producers keeping their finishers to higher weights, whixch was also boosting output. Some of this had been due to pigs being rolled, but there were also a significant number of pig units setting higher target weights.
European effect
The Russian import ban continued to have a depressing effect on pig prices throughout the EU, and while new markets had been found for pork, increasing production in the US would mean Europe’s farmers would struggle to sell more into export.
Mr Howarth suggested that some producers had already realised this and, in Germany in particular, the number of sows being culled had shown a marked increase as some pig farmers exited the sector.
At the end of September last year, Great Britain was the only major pig producer in the EU to have a profitable pig sector – although most of that profit had now disappeared. Sweden was just about breaking even four months ago, while the Netherland, France, Germany, Ireland and Denmark were all firmly into losses territory. Â