A more optimistic start to 2023 - but we need to get profitability back into pig businesses
31st Dec 2022 / By Rob Mutimer
In his New Year message, NPA chairman Rob Mutimer says 2023 must be the year that sees profitability return to pig farming.
As we enter 2023, I am slightly more optimistic than I was three months ago – but this year has to be about getting some profitability back into pig farms.
There are more positives than there have been for a while. I think we have got a shortage of pigs coming, both in this country and in the EU, but how big it will be and when it will materialise, I don’t know.
The massive input inflation, particularly around feed costs, wrecked 2022 for many pig businesses, but that situation is improving. Wheat prices are down by £120/tonne from the May peak, although a lot of us have bought forward as we were worried about the market being short.
The avian influenza outbreak has meant there is probably a million tonnes an surplus of wheat in this country, which has put pressure on the price.
I am disappointed that the pig price has stopped rising since it hit £2/kg mark in September – that figure still isn’t enough for most people to cover their costs.
But tightening pig supplies and the falling grain price does give me some confidence - we just need to recoup some of the massive losses we’ve endured and get some investment back into the industry, for the sake approach to farmers and also the allied industry.
It is also important to stress that, as they see input prices going down, that shouldn't be a temptation for buyers slash the pig price, as the industry is still a long way from where it needs to be. Although some people are making a little bit of money now, there are still a lot of producers out there who are haemorrhaging money
People have not been able to invest over the past 18 months, and if they don't start investing in their herds again, they won’t have a lot longer left in the industry and we could see a further contraction.
One big thing to look out for in 2023 will be the next stage of Defra’s review of contractual relations in the pork supply chain.
We had over 300 replies to the consultation - a lot of people put a lot of time into describing the situation industry is in, so with a bit of luck, we will get some decent outcomes on that - but it’s going to be a slow process.
In the meantime, we need to have some more grown-up conversations with the supply chain to make sure that there is enough money in it for all parties. We all keep pointing fingers at each other, but the food chain is working on such tight margins, any little thing is pushing people over the edge.
The supply chain has never been more fragile than it is now because a lot of the smaller processors are running on empty.
It is incredibly important that we get some sort of stability across all parts of the chain. There will be more producers who sit down this Christmas, like they did last Christmas, and decide whether they're going to remain in the industry. They need some confidence.
There will be a lot coming up policy-wise in 2023, covering all sorts of areas, from animal health and welfare and veterinary medicines to gene editing and more.
But one I will be keeping a very close eye on is what this government does regarding trade negotiations with countries that are big pork exporters, such as Canada and, eventually, the US.
There might be some advantages out there to be had, but we have got to hold them completely to their word, both the Conservative and Labour parties, that they will not let products into this country that have been produced to standards that are illegal here, for example, sow stalls.
And finally, I want to thank the NPA team – Andrea, Rebecca and Charlie, who are brilliantly led by Lizzie. They are one person down and face a huge range of topics and challenges covering all parts of the pig sector on a daily basis, but they always do a great job, using their knowledge and influence and continually deliver for members.
They work fantastically well as a team, and they will continue to monitor everything that happens over the next 12 months and respond, as always, with the best interests of the pig sector at heart.
And to all our members, thank you for your continued support – it’s been a horrible 12 months, but let’s hope we can get back on track in 2023.
Happy New Year.