Pig producers in Scotland continue to benefit from firm farmgate prices, but uncertainty looms

Scottish pig producers continue to benefit from firm farmgate prices around 10% higher than a year ago, according to the latest market commentary by Quality Meat Scotland (QMS).

Producer prices have also been remarkably stable throughout 2020.  However, this firmness in the domestic market has not been repeated elsewhere.

Stuart Ashworth, Director of Economics Services with QMS, pointed out that European pig farmers are typically seeing prices 7-8% lower than this time year with larger falls reported from Brazil, the USA, Canada, and that as a result K pig producers are getting a price well above the EU average which is in sharp contrast to the position at this time last year when the UK price was lower than the EU average when quoted in Euro.

According to Mr Ashworth, the general firmness in the UK market has been achieved despite slaughter statistics showing a small increase in both the numbers slaughtered over the first third of the year and increased prime pig carcase weights.

He said: “Market firmness has been helped by firm retail demand particularly for bacon and sausages, although the market for pork roasts has been more challenging.

Mr Ashworth continued that market sentiment has also been helped by continuing firm demand from China and reduced imports, with the European Union, for example, reporting exports to China in the first quarter of 2020 75% higher than the same period last year.

The longer-term effects of African Swine Fever in China are expected to result in continued firm demand from China for pig meat well into 2021.  However, according to Mr Ashworth, recent indications are that import prices paid may not remain as firm as they currently are as Chinese producer prices, although about double the levels of a year ago, have fallen more than 20% over the past quarter.

And, as attention once again turns to Brexit negotiations, the importance of global trade patterns and access to markets is a key area of concern for the sector.

Mr Ashworth said: “The UK has published its new import tariffs to apply from January 1 2021 and they include import tariffs on pork and pork products.

“With no indication of any new quotas in the document, this would mean that all pig meat imports from the EU, and elsewhere, would face import tariffs unless negotiated otherwise.

“While import tariffs would offer some protection to producer prices, without tariff-free access to export markets for cuts less popular in the UK, the benefit would be less robust.”

Mr Ashworth added that the implications of trade disruptions can be considerable not only for the pig sector but also for the cattle and sheep sectors, saying that historically, agreeing the terms and conditions of trade take considerable time to negotiate and inevitably involve compromise.

He said: “That compromise should not result in the high standards of animal welfare and food safety demanded of Scottish producers being compromised by relaxation of non-tariff barriers to trade.”

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