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2022 was the hardest of years, but better times are ahead

Guest WritersBy Guest WritersDecember 29, 20224 Mins Read
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NPA vice-chairman Hugh Crabtree sets out his hopes for better thingsĀ ahead in 2023, after the hardest of times for the UK pig sector.

All voices of commentary are agreed: these have been the hardest times experienced by the UK pig sector in living memory.

Speaking as ‘a lifer’Ā in this industry, that would certainly be my view. To witness, from the comfort of a supplier’s position, my customer base picking up all of the risk and cost of circumstances well beyond their control has been sobering.

My own business is small with a relatively low overhead. Labour is our biggest cost but it is able to turn its hand to every task required. In recent years we have prepared for a major marketing campaign which has been delayed over and over by lack of development conclusion.

Whilst this means we have cash on hand we will also witness commercial losses for the first time in over two decades.

If the tap of sales revenue was turned off completely, like our customers we’d survive for a while but there is no way we could hold out against such punishment as is being meted out to pig producers. Something like 18% of the national herd has gone – all within the independent producer segment of the market.

It’s probably not all over yet and for suppliers this is not good. Fewer businesses, fewer decision makers, less business and the inevitable shrinking of the whole infrastructure of the industry.

Of course, there are independent producer businesses out there with acreage, good contracts and top flight production management able to weather the storm. But even the best and least leveraged businesses have had to tread water.

Investment in facilities

At a time when regulatory demands in crease with respect to animal health and welfare and the pressure on agriculture to achieve net zero mounts; the last thing you want is a halt in investment in facilities improvement, staff training, IT systems and development. It turns out only 7% of our pig building stock is at ‘state of art’.

That means 93% of UK pig buildings are in need of refurbishment at some level at least and more likely complete replacement. You can’t do that without the cash and confidence of business owners and their banks.

The gap between record feed prices and market returns has been falling but it is constrained by much lower pig prices in mainland Europe. Consumers want local produce; processors can source local produce; retailers want local produce; but they simply won’t pay enough for it.

All markets are segmented. You can have cheap or expensive anything. It all depends on the value proposition of the goods in question. That’s what sets the price position. Apparently, the value of our local produce – high welfare high health well looked after pigs – is not as robustly embedded as we’d like to think.

And to cap it all, we can’t use levy money to promote the most obvious delineator: its Britishness. Crazy!

This means retailers can dip and dive at will. Claiming support of British farmers on the one hand while stocking their shelves with higher margin produce more cheaply sourced on the other. They are past masters of it which is why they never, ever report losses to their shareholders.

Better times ahead?

Looking forward, for those that have held on there will be better times ahead in 2023 but probably not until late spring. For suppliers, we’ll have to be more patient yet as any upturn in the market is not reflected in more business for us immediately. There’s a lag of at least three months.

Assuming government plans to support agriculture by providing public funds for public good; then there will be grants available to improve facilities for more sustainable food production. There will be grants available to support altered production management to allow entire tails and grants for an accelerated move to loose lactation systems.

In this last regard, the UK sector is well on the front foot having successfully demonstrated freer farrowing at commercial scale on many sites. Have cash, will invest and that means pig farmers need to be making money again.

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Previous ArticleNPA seeks clarity on UK’s ability to export pork to EU in event of ASF outbreak
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