The NPA has set out the case to Defra for a comprehensive pig sector support package, as the industry looks to survive its second market crisis in the space of a few years.
The NPA’s proposals include short-term financial aid to reflect the extremely low prices some pig producers are receiving and the current supply and demand balance, along with some longer-term measures to deliver future stability for the sector.
Defra minister Stephen Morgan asked the NPA to develop a detailed support package in July, after he met key figures from the association to discuss the serious impact on producers of the ongoing turmoil in the pig market.
Within the past year, many indpependent pig producers have been given notice on all or some of their pig supplies. In an NPA member survey, completed in July by around 25% of its independent producer members, nearly half of respondents said they had been served notice on their contracts.
At the same time, some producers are receiving exceptionally low prices, particularly when they are having to sell on the spot market as a result of losing cotracts. The NPA said that, in some cases, they are currently losing around £50/pig and are haemorrhaging money each week.
Proposed support package
The NPA’s proposed package seeks targeted financial support and longer-term policy asks. Key elements include:
Pig price top-up scheme: Similar in scope to the Scottish Government’s offering, the NPA is calling for direct financial support for producers who have been being forced to sell on the spot market. The supports would reflect the exceptionally low payments these farmers are receiving relative to the cost of production.
Pig Industry Restructuring Scheme: Many producers have already reduced pig numbers in response to the situation with contracts and prices and some have decided to leave the industry altogether. The NPA anticipates more may go down this route as notice periods end.
The association is, therefore, asking the Government for a restructuring scheme to provide financial aid to those producers who have no other option but to close either all or part of their business.
Slaughter incentive payment & scheme private storage: The bulk of the 6-month notice periods will come to fruition from October onwards, meaning there could be around 12,000 pigs per week on farm not under contract to sell and with no alternative market. This is not only an economic challenge, but also a significant welfare concern.
The NPA is proposing a government-funded Private Storage Aid (PSA) scheme for pigmeat accompanied by a Slaughter Incentive Payment Scheme (SIPS) until supply tightens and demand improves or until the pigmeat can be exported globally, likely to a non-EU market.
Market monitoring: The NPA is proposing using the powers within the Agricultural Act to gather data to improve forecasting for the British breeding herd, including piglets born. There is an existing precedent within the poultry sector and AHDB has started to explore this possibility with pig processors – but the NPA is clear any scheme must be compulsory, if it is to be effective.
Industry code of conduct: The current situation, including discussions around contractual legislation and the formal introduction of FDOP regulations, have again highlighted issues around the culture of how the pig market functions and certain behaviours which independent producers consider manipulative and unethical. The NPA is, therefore, looking at the possibility of an industry code of conduct to compliment FDOP and help enforce the behaviour change needed across the supply chain.
Improving transparency in food service: Retailers’ support for British pigmeat has remained relatively stable. Foodservice, however, is the obvious area for improvement. It lacks transparency and uses far more imported pigmeat owing to the strictly price-driven nature of this market. The NPA wants the government to act to improve transparency in the out-of-home and foodservice sector to bring some parity with the country-of-origin labelling requirements we see in retail.
Government buying standards: The government must lead the way in these efforts by meeting its long-standing commitment to reform Government Buying Standards to include greater volumes of British products in the public sector.
Core standards in trade: The NPA supports the NFU’s calls for a set of core production standards that would apply to both domestically produced and imported food. This will prevent UK farmers’ animal welfare and sustainability efforts from being undermined and ensure that the UK does not offshore food production to countries with less sustainable systems and lower animal welfare standards.
Comprehensive
NPA chief executive Lizzie Wilson said: “The pig sector is going through another hugely turbulent period, just four years after the last crisis – and we face losing more producers and more of our critical mass, if things continue as they are.
“The Scottish government has set a positive example with its £2m pig industry support package announced in July.
“We are seeking similar support for struggling producers in England, alongside various longer-term measures that will take out some of the unacceptable risk they currently face, improve supply chain behaviour and boost British pork sales.
“We believe this is a necessary and proportionate set of proposals that would help ensure a sustainable future for our sector – and we urge ministers to give it their full consideration.”