A more positive outlook but a long road to recovery - PIG
16th Mar 2023 / By Alistair Driver
While the situation for pig producers is undoubtedly improving after two years of crisis and heavy losses, there will be no rapid road to recovery.
That was clear as the NPA’s Pig Industry Group held its latest meeting in London on Tuesday.
The pig price reached a record high of just short of 210p/kg this week, having risen by 11p in the space of nine weeks, and, while the overall input cost burden remains high, the wheat price, the most influential part, continues to fall. Feed wheat for March was quoted by AHDB at £212/kg today.
During the regional round-up, producers welcomed the brighter picture, but highlighted the fragile state of many ‘battered’ pig businesses.
The Northern representative described the situation as ‘slightly better’, with ‘quite a big range in how confident people are feeling’. “Those who have been hardest hit over the past two years are still feeling fairly low. Prices have moved up, but the cost of production is still very high,” he said.
One of the biggest factors influencing how producers are feeling is how much cover on feed they took out when prices were still relatively high. Some that remain locked in at higher prices are yet to see the benefits of the recent downward trend.
This was echoed by the South West representative, who said that whilst producers who were using the spot market to buy raw materials were paying increasingly less, others on long-term fixed contracts were still ‘paying significantly over for their grains’, which he said had caused ‘a bit of disquiet’.
There was also frustration in the region that while the spot price for pigs is in excess of 220p/kg plus, the contract price is ‘still dawdling at around 212p/kg’.
The Eastern representative said that after a tough two years, producers are now seeing ‘real positives on the agenda’, although he highlighted reports of respiratory health issues in the region.
The Midlands representative also highlighted some ‘general health issues’ among pigs, which he suggested were potentially a legacy of the backlog, which saw overcrowding on farms, while farmers were unable to carry their usual routines. “We are also now seeing effects of the hot summer on production,” he said.
He said producers remained sceptical about how long the better pig price would last and whether ‘we will be allowed to get to the sort of price we need by retailers’. “One bright spot, however, is that a lot of processors are looking for pigs anywhere they can get them,” he added.
The South-Central producer representative said more producers had been hit by summer fertility than had been anticipated. This is likely to further squeeze pig numbers. The feeling among local producers is that numbers are already very tight, with some abattoirs actively looking for more pigs, she added.
“There are a couple I have spoken to, who, with the cull sow price going up, are still not putting retirement off the agenda. They don’t get the feeling this is going to be a positive situation for long,” she added.
She said local farmers were also ‘very worried about drought’, with reports of very low aquifers and boreholes drying up already.
Veterinary and pharmaceutical views
The veterinary representative backed up the comments about disease levels, including ‘rumbling respiratory disease’, and also about the general lack of pigs coming through the system.
She said the first Pig Pathway Animal Health and Welfare Reviews had now taken place, with more to come over the next few months.
The pharmaceutical representative pointed out that sales of vaccines have been falling in line with sow numbers, with no indication, however, that producers were turning away from vaccines to cut costs.
Cereal prices continue to come back, with all eyes this week on whether the Ukraine corridor for exporting crops and fertiliser, due to end soon, will be extended. This will have a big impact on future prices, the feed representative said.
However, the price of soya has increased even further, currently at ‘eye watering’ levels in the mid-£500s, on the back of drought in Argentina, despite a bumper Brazilian harvest.
“As we have heard, some people who have fixed into higher priced contracts are not seeing benefit of reduced cereal prices. Overall, I would say optimism on farm is slightly better – at least not as dire as it was,” she said.
Building and equipment
Despite one or two ‘green shoots’, it remains ‘very quiet’ in the buildings and equipment sector. “It takes a while for production equipment to grow through any return to confidence among primary producers, so we are still waiting for that cycle to unfold,” the representative said.
He said there was, however, a lot of interest in energy cost reduction and efficiency.
Marketing and processing
The marketing representative said producers were ‘a bit more positive’, given where the pig price is, but costs remain high and some producers are still talking about getting out. “Pig numbers are clearly down and there are a lot of questions for the future,” he said.
One of the processor representatives said businesses were expecting domestic supplies to be down in the short term, but to recover over time.
He also highlighted the pressure coming from retailers to deliver long-term welfare requirements and carbon reductions.
Another processor representative said their business was aware that ‘structural changes’ in pig supplies were still happening, with a lot more to play out on that front. He noted that indoor Red Tractor pigs were getting closer in price to outdoor-bred pigs.
A third noted that pig weights have remained pretty level in recent weeks - the SPP sample has averaged just over 89kg all year.
He also highlighted to producers that the Food Standards Agency has been raising concerns over the cleanliness of pigs presented at abattoirs, and stressing that they want to see cleaner pigs.