Retailers and processors must increase the prices paid to pig producers to beyond £2/kg or risk losing the sector, according to NFU Scotland.
In the last five weeks, the Standard Pig Price (SPP) has risen by almost 20p/kg – some of the largest weekly rises ever recorded – but the huge increases in costs faced by producers means that pig producers are still losing substantial sums of money.
NFU Scotland’s pigs committee chair Jamie Wyllie estimates that current cost of production, taking surging feed, labour, haulage and energy costs into account is around 204p/kg, meaning that the SPP must break 200p/kg soon just to allow producers to start breaking even after many months of recording crippling losses.
Mr Wyllie said: “In a week when some processors and supermarkets have taken the opportunity to make large PR statements about the amount of money that they are putting into their spot portion of the pig price, the reality is that it’s nowhere near enough.
“While I appreciate that the pig price has risen, and that this week we saw the largest rise in price I have ever seen, we are still a long way from even covering the cost of feed, electricity, diesel, labour and haulage.
“Feed prices alone have increased by 60% since February 2021, with more than one third of that being directly linked to the dreadful situation that is occurring in Ukraine. With almost 70% of the cost to produce a pig being feed, this unforeseen increase in feed cost has had a devastating affect for the pig farmer.”
Within Mr Wylie’s own business, despite significant investment in solar and wind energy to produce one-third of his electricity requirements, his energy bill is expected to exceed £500,000. Employing more than 40 people, who are the core of his successful business, he has increased wages in line with inflation to support them through record increases in the cost of living. He explained that takes his total labour cost for the whole business to over £1.3m per year.
“We took this decision to increase wages, even though our industry is making record losses, because it is morally correct, but we need retailers and processors to understand this and make similar moral decisions to support their suppliers,” he said.
“We have long believed that the retailers have been keeping an unfair share of the final sale price and record profit announcements this week suggests it is the case.
“In the year to date, the UK pig farmer is only getting around 37 percent of the final sale price when, in recent years, it has been up to 42 per cent. This 5 per cent may not sound like very much but it would increase the price paid to the farmer by around 19p per kg. Where did that 19p go?
“The blunt message for retailers and processors is that they must help. Pig farmers need a bigger share of the final price, and we need an increase to what we are paid now. If the price does not make it over £2 per kg soon there won’t be a British industry left.”
Pictured: Scottish Cabinet Secretary Mairi Gougeon met Jamie Wylie on his farm recently