Pig producers are resisting pressure to drop prices in the wake of falling feed costs. They warn that cumulative losses sustained in recent years mean the industry remains in a critical state.
Any confidence that does exist that the industry can improve its competitiveness in the coming year is predicated on farmers getting a fair price. They point out that pig prices have consistently and stubbornly remained below their cost of production and that the industry has racked up losses of £175 million in the past two years alone.
A nationwide survey conducted earlier this year by Promar International revealed that confidence in the pig sector had fallen for the third consecutive year. There is some optimism, though, that the industry can become more competitive over the next year, but confidence levels remain linked to improving prices.
Figures issued by BPEX this month show that producers would need to receive 13p/kg above the cost of production for the next 24 months for the industry to recoup its losses of the past two years and to invest in increasing efficiency and productivity. BPEX figures show that the DAPP has been below the cost of production in all but one of the past 27 months.
While feed wheat prices and compound pig feed prices have started to reduce in recent weeks, these will not yet be reflected in the cost of production for most producers. This is because most employ feed risk management strategies that have resulted in them being locked’ into feed supply prices, typically until the end of the year.
The chairman of the NPA, Richard Longthorp, has urged caution on any decision on prices, insisting that any downward movement would be premature.
“We’ve campaigned as an industry for some considerable time now to get the DAPP at least somewhere near the cost of production figure,” he said. “It’s not quite there yet and it’s taken a long time of constant effort to get it to where it is. It would be irresponsible if processors and retailers used the first sign of falling feed costs to pay producers even less.
“Indeed, it would be devastating if these green shoots of optimism recorded in the Promar research that the UK can improve its competitiveness through increased efficiency and productivity were to be strangled at birth. It’s in the interests of the whole supply chain to ensure a sustainable pig industry in the country, especially at a time when consumers are more concerned than ever before about provenance and traceability.”