Woodhead Bros, the wholly-owned subsidiary of Morrisons, has increased its weekly contribution price by a massive 30p/kg, taking it to 180p/kg.
Other processor contributions have reportedly gone up by 10-15p and this follows last week’s big contribution price hikes of 12-16p across the board.
Retailers and processors appear to be responding to the soaring costs of production that are threatening the viability of pig production and rapidly rising pig prices across Europe, which are making imported pork less attractive.
Most UK pig producers are facing costs of production in excess of £2/kg, as the post-Ukraine wheat price spike pushes feed costs even higher. Producers were already losing more than £40/pig in the last quarter of 2021, a figure that will have risen considerably since.
The NPA has written to all the big retailers asking them to increase their pig price to at least £2/pig so producers can at least have a chance breaking even.
NPA chief executive Zoe Davies welcomed Morrisons’ move, which she described as ‘good start’. “We appreciate their comment about moving closer to paying the cost of production but this must happen as soon as possible,” she said.
“The contribution price is only one element of the contract – many are made up of several elements including part SPP, part tribune price and part contribution price, so it isn’t clear yet what the impact will be on both the SPP or for producers supplying Morrisons.
“That said, Morrisons are the first retailer to make such a move since we wrote to all of them just over a week ago, and we expect others to follow suit.
“This is crucial if they wish to secure British pork going forwards as pig farmers are taking decisions on their future in the sector right now, having made losses for the 5th consecutive quarter and being unable to take any more input price rises without a supportive pig price.”
The SPP only crept up by 0.4p last week to 138.5p/kg last week, as last Friday’s price rises came too late for it – and even when they are factored in, the SPP, by its nature as an average pig price, will not lift in line with processor increases or European prices.
The contribution price is just one element that goes into individual pig contracts, which vary hugely – many will also include the SPP, itself, and, in some cases the Weekly Tribune price, while some will also have an element of cost of production, too, AHDB analyst Duncan Wyatt said.
However, he added: “I would expect the reported price increases to feed into the SPP in the coming weeks, and because of the way people use the SPP in contracts, it ought to then build up a degree of momentum.”
