The pig sector is heading for significant disruption this autumn, with a relatively high proportion of producers considering quitting the industry as a result, according to a revealing NPA member survey.
The survey has shone more light on how the industry has been affected by the unprecedented wave of notices served on independent producers by leading processors and appears to confirm the sector is heading for a further contraction. It also highlighted uncertainty around pig contracts ahead of the mid-August deadline for the Fair Dealing Obligations (Pigs) Regulations.
The survey, completed by around 50 NPA members during July, was voluntary, so the figures for each question cannot be extrapolated with any confidence across the sector due to ‘self-selection bias’. Nonetheless, the responses provide some stark indicators of where the pig sector is at heading into what is going to be a difficult autumn.
Served notice
Nearly half of respondents said they had been served notice on their contracts. Asked to state what proportion of their herds were covered by the notice served, the answers varied significantly, ranging from as low as 15% in some cases to 100% in others, with a wide range of figures in between.
The responses also confirmed that all of the big four processors – Cranswick, Pilgrim’s Europe, Sofina Foods and the Myton Food Group, the manufacturing arm of Morrisons – had served notice on producers, albeit to differing extents.
Respondents were asked about the timings of notices served. While a small number on contracts have already ended, the responses indicated that the vast majority of the cuts are set to come into effect in October and November.
Industry experts have estimated that around 10,000 to 15,000 pigs could be coming onto the market without a buyer each week during the autumn and winter.
Contract uncertainty
The vast majority of respondents sell through a marketing group, with two-thirds exclusively using a marketing group, 12% going through a combination of a marketing groups and direct to processors, and the remaining 20% selling direct to the processor.
Just over two-thirds of respondents had written contracts, although only two-thirds of the people who had written contracts had seen them.
The responses were submitted a few weeks ahead of the August 13 Fair Dealing Obligations (Pigs) Regulations 2025 (FDOP) deadline when all pig contracts must be in writing and compliant with conditions set out in the regulations.
Nonetheless, they highlighted that there was still some way go, with only 6% of respondents saying they had an FDOP-compliant contract in place.
Nearly two-thirds said they were aware of the regulations but did not have a contract in place and 22% said they were ‘not very aware’ of FDOP and had not discussed it with their customer.
Exiting the industry
The answers to a question about the options being considered in response to the downturn were also illuminating. A total of 14% said they were considering exiting the industry, while 20% were considering or had already reduced pig numbers.
A small number said they were ‘considering culls’ or depopulating and then repopulating the unit in the hope the market had improved by that point. Around 12% said they expected to be selling on the spot market in response to losing contracts.
Stark picture
NPA public affairs manager Tom Haynes said: “We wanted to gather a fuller picture of what is happening in the marketplace and the impact of the FDOP regulations.
“The responses painted a stark picture, confirming our worst fears about the likely disruption coming in the autumn and winter when thousands of pigs will hit the market without a contracted destination.
“They also highlight the likelihood that we will lose more producers only a few years after the latest industry contraction, raising further questions about the long-term sustainability of the independent pig sector.
“The answers highlight concerns about the sector’s readiness for the FDOP regulations coming into full effect in August.
“We will use the results to reinforce our lobbying efforts with government and discussions with the supply chain, as we seek support for the industry at this incredibly difficult time.”
The NPA has called on Defra to deliver a support package for the under-pressure pig sector and helped to organise a roundtable event last week for independent pig producers to explain the situation to the Agricultural Supply Chain Adjudicator (ASCA).