NPA fighting for the future of the pig industry
4th Apr 2022 / By Alistair Driver
The NPA is continuing to push at all levels, including regular contact with Farming Minister Victoria Prentis, to get pig prices up to a level that ensures a future for pig production in the UK.
“It has been relentless,” explained chief executive Zoe Davies. “We are encouraged by the recent price increases that are giving producers hope. But our message to everybody – Ministers, processors, retailers and other buyers of pork – is that there is still a very long way to go. This is only the start.
“Many pig producers remain in absolute dire straits financially – and unless these price increases are sustained, we will lose them, and, with that, our capacity to produce and supply the pork products our consumers demand.”
Zoe described February’s pig industry roundtable, which was commissioned by Defra at the request of the NPA and NFU and hosted by Mrs Prentis, as a ‘game-changer’. It brought all parts of the supply chain together to discuss the realities of the pig backlog and the wider issues affecting producers, including soaring costs of production.
“While we didn’t seem to gain immediate solutions on the day, the summit has undoubtedly improved communications across the supply chain and made a real difference, with Mrs Prentis taking an active role in raising concerns and holding individual businesses to account,” Zoe said.
“As a result, we have seen movement on the backlog, and there is now a far greater understanding of how the supply chain works alongside an awareness among processors and retailers of the huge financial challenges producers face, and their battle for survival.
“This has given us a basis to make the case for getting more money into the system and through to producers as quickly as possible. We are just starting to see the fruits of that.”
Since the summit, there have been numerous follow-up meetings, in some cases, chaired by Mrs Prentis, bringing most of the parties together, while there have also been individual meetings between Mrs Prentis and the processors. The NPA has held meetings with many of the companies involved in the pork supply chain.
“It has all been about the same message – taking action now to ensure producers receive sufficient income to pay for their feed, to stave off the bank, stay in business and, after enduring massive losses for more than a year, finally get back to break-even point,” Zoe added.
“Victoria Prentis has been very helpful. We have never had such good access to a Minister – we meet and talk regularly. She is taking on board what we say and fully understands the severity of the situation. In turn, she is seeking action from others in the supply chain.
“We have seen some good support from processors that have shown they understand the urgency. Some retailers have been helpful, too, and, behind the scenes, have been doing what they can.
“But we desperately need to see more urgency from some of them, including the UK’s biggest retailer and others that have the necessary resources to make a difference. They hold our future in their hands, and what they all need to understand is, with EU pigs in short supply and prices going through the roof, there will be nowhere else to go if we lose a big chunk of our production base.
“The NPA, as the representative body of the pig industry, will continue to work tirelessly, not only on solutions to the pig crisis, but also on a huge range of other issues of short-term and long-term relevance to the industry. We continue to believe there is a bright future for this industry, as long as everyone plays their parts.”
What is the current situation?
Pig producers have endured more than a year of negative margins, including typically losing around £25/pig in the first half of 2021, increasing to an unprecedented £39/pig in the final quarter. That was with wheat at around £190-£210/t.
Net margins will have worsened significantly during the current quarter, leaving many producers facing a battle for survival.
An already desperate situation on pig farms across the country was pushed beyond the survival limit for many, after Russia’s invasion of Ukraine prompted a dramatic spike in the wheat price from around £215/tonne to in the region of £300/tonne. Soya prices are also eye-wateringly high, while other input costs, including energy, fuel and labour continue to rise.
- You can read a case study of how soaring costs is affecting one pig farming business HERE
At the March NPA Pig Industry Group meeting, producers highlighted how costs of production have soared beyond £2/kg, prompting the NPA to write to all the major retailers calling for pig prices to be increased beyond that point.
There have been some notable processor contribution price increases over the past few weeks, with more on Friday and Morrisons-Woodheads leading the way.
However, while contracts vary significantly, many producer pig price contracts remain heavily linked to the SPP. While it has shown healthy increases over the past fortnight, including a record 5.3p last week, it still stands at just under 147p/kg, as its nature as a price average index renders it unable to respond as quickly to the market as most within the industry would like.
This is why the NPA is demanding more from the supply chain, particularly some of the big retailers.
EU price on the up
Meanwhile, there has been a complete turnaround in the relationship between UK and EU prices. Until the past few weeks, UK pigs had held a premium in excess of 30p/kg over EU pork for a very long time.
After a run of big price increases across Europe in March, notably in Germany, the EU Reference Price soared to 152.3p/kg at the end of the month, compared with a UK figure of 149.3p/kg, highlighting how cheap EU imports are no longer an option for UK retailers and processors.