‘More pig farmers to quit’ as feed costs soar

Apr 18 2008 by Sam Wood, The Journal

THREATS to the British pig industry from rocketing feed costs and almost static prices are likely to continue, says an independent report.

It predicts production costs could be 180p per kg by 2010, compared with 140p now and 108p in 2006.

The report, Global feed commodities market, its impact on the British pig industry, and risk management strategies to mitigate this, was commissioned by the British Pig Executive with contributions from ABN and Barclays.

Feed accounts for almost half the cost of producing a pig, and the rising price of feed commodities has made production costs soar.

ABN forecasts the cost of producing a kilogram of pig meat will rise from 108.2p in 2006 to 148.1p this year.

Assuming an average producer price of 115p in 2008, this implies a loss of 30p/kg, worth £22 on every pig and an industry-wide annual loss of £200m.

Barclays’ analysis highlights how supply chain collaboration such as fixed-price contracts, or sales contracts linked to commodity prices, might ease the risk faced by producers.

One North pig farmer says he will give up because of the difficulties. John Walton, who farms near Darlington, said: "I have been a pig farmer for over 40 years and we are getting less for our meat than we were 30 years ago. It is just impossible to make any money out of it at all and our herd was always among the best in the country.

"I think there are some herds which will survive, but we will see a drastic reduction in the number of pig herds. Things have been bad for the last 10 years and there are no signs that they are going to improve in the near future. That is why we are getting out of pig farming.

"In my opinion, the supermarkets are to blame. They are saying the consumer won’t pay a higher price, but then they put prices up and don’t pass the increase on to the producers.

"Imports are also having an impact and some other countries don’t have the same hygiene standards we do here."

Bpex chairman Stewart Houston said: "The report illustrates how the British pig industry remains under threat. Without a price of 140p per kilogram, pig producers will continue to suffer unsustainable losses. This will see British pig producers leaving the industry for good.

"The British pig industry is unique, producing pork, bacon and ham to standards of animal welfare which are not regularly matched outside Britain. The loss of the British pig herd will mean consumers lose the choice to buy pork, bacon and ham from a high welfare, assured supply chain that deploys sustainable production methods."