Mick Sloyan, former AHDB pork strategy director and currently an independent industry analyst takes an in-depth look at the Government’s support package, including the thorny issue of its impact on pig price
I was pleasantly surprised when the government announced the support package for the industry. After the pronouncement from the Prime Minister, it looked like nothing would be forthcoming.
But after all the hard lobbying, especially by the NPA, things changed. The skill and effort to get coverage of the crisis on national and international news agenda cannot be underestimated, and it paid off. It must be the Strictly Come Dancing season, as it was impressive to see George Eustice perform an almost flawless turn on his heels.
But before anybody reaches for the scores, we should recognise two things. Firstly, this package will not solve the financial crisis facing producers. British prices remain significantly higher than the competition from the EU.
This will continue to put downward pressure on British pig prices at a time when feed prices are at record levels. Secondly, this is not a support package for pig producers. It is a support package for processors, and the hope is that this will help alleviate the welfare crisis on farms.
Processors will now have access to temporary visas for 800 pork butchers in an effort to get increased throughput in boning plants. The hope is that this, in turn, will allow an increased pig kill. This is a welcome step, but relies on processors being able to recruit trained staff who want to come to this country for a relatively short period of time.
I am told that processors are working with agents to source staff from all over the world and not just tempt people back from continental Europe.
It remains to be seen if this will be enough. The British Meat Processors Association have estimated that they are short of about 12,000 trained butchers across the meat industry. There is also the question of the priority that these extra staff will be given to work on British pork.
As well as killing and butchering British pigs, all the major processors also cut and pack imported pork for the supermarkets. There will undoubtedly be pressure to keep the supermarket shelves full in the run into Christmas. Let’s hope that imported pork is not given preference over home produced.
The Government has offered financial help to processors to cover some of the extra costs of doing Saturday kills. To make a serious impact on the backlog there will need to be several processors doing this over several weeks.
I understand there are practical difficulties in getting staff abattoir staff to work 6-day weeks for an extended period. Hopefully the government help will be enough to provide a sufficient financial incentive for staff faced with rising inflation and taxes.
Saturday kills raise the issue of whether these pigs should be included in the SPP (Standard Pig Price). The government has introduced this incentive to overcome the growing welfare problems caused by pigs backing up on farm.
The pigs slaughtered on this basis are therefore clearly not part of the regular market and certainly cannot be described as ‘standard’. There has been some concern expressed that excluding these pigs from price reporting will in some way distort the market or undermine the integrity of price reporting. I think these fears are misplaced.
The SPP already excludes prices from a large section of the pig market. Following an agreement between processors, producers and AHDB. it was agreed that pigs that attracted a premium in the market, such as outdoor bred, would be excluded. For those in the industry that wanted a measure of the whole market the APP or All Pigs Price is calculated in addition to the Standard Price.
The Private Storage Aid scheme, due to start in mid-November, aims to provide a financial incentive for processors to put pork into frozen storage for 3 to 6 months. The decision for the processors is trying to work out if the aid will cover the cost of storage plus the change in value of the pork between the pint of purchase and sale.
Where PSA has worked well in the past is allowing processors to take the pork out of storage early if it is going to be exported. Full details of the scheme have yet to be announced but this could be a very useful option.
So, will the government aid package win the glitter ball or be in the dance off? It’s all in the hands of the processors and how they react.