A welcome boost - Processors increase prices by 12-16p
11th Mar 2022 / By Alistair Driver
The UK's big processors have increased their contribution prices by between 12 and 16p today, providing a much-needed boost to desperate pig producers.
Cranswick has confirmed a 16p hike in its weekly price, while two more of the big players are understood to have upped prices by 12p and 16p.
The increases come as pig prices soar across Europe, notably in Germany, where the finished price is up more than 23p on the week, with the sow price 22p higher. Prices are up across the board, with a similar-sized leap in Belgium and big upward shifts in Spain, the Netherlands, France, Denmark and more.
The processor's big weekly increase also comes the day after the NPA sent a letter to retailers asking them increase the amount they pay for pork up to beyond £2/kg to enable producers to just break even. The SPP currently stands at 138p/kg.
Pig producers, who have already endured more than a year of negative margins, compounded by the pig backlog, have recently been hit by the massive spike in the wheat price, which, at times hs topped £300/tonned, caused by Russia’s invasion of Ukraine.
A Cranswick spokesman said the price increase reflected the escalating cost situation on pig farms. “We are working with the retailers and all of our customers on a daily basis on this. There is a recognition of the increased cost pressures the industry is facing and the impact this is having on pig farms, and we are doing what we can to support the industry,” he said.
The price increases are an important step in the right direction, albeit not yet enough to bring producers close to break-even point.
In his Friday market report, Peter Crichton said: "The latest influential German producer price continues its sky rocketing ascent putting on a further 24 Euro Cents this week, to stand at 1.75 Eur, which is equivalent to approximately 146p in our money.
"Cull sow prices which are seen as a barometer for pig meat values throughout the EU have taken a huge jump and a weaker Pound is also finally working in producers favour and as a result the Euro improved in value from 82.38p to 84p.
"UK weekly contribution prices have also shot up with the major players up by 12p-16p/kg between 148p – 150p/kg, but this increase will only directly benefit those producers on this type of contract.
"Although the spot market is still over supplied with heavy pigs, at least they are worth more than recently, although some spot buyers have been slow to react and are still offering prices as low as 100p/kg in places.
"A 20p/kg surge in cull sow prices has meant that export buyers were prepared to pay in the 58p – 61p/kg range, which translates to a per head figure for an average sow in the region of £80 and heavier types exceeding £100.
"The indications are that there is still room for further upward movement in this sector providing that the black hole in pig numbers throughout Europe continues to get larger."