NPA urges Defra Secretary to ensure support package doesn't further damage producers

The NPA has called on George Eustice to take action to ensure the Government’s pig industry support package delivers on its key aim of easing the pig backlog on farms.

In a letter to the Defra Secretary, NPA chairman Rob Mutimer warned that the measures, while, well intentioned, could end up benefiting processors but further damaging struggling producers, if they force pig prices even lower. 

He called for Mr Eustice to support the NPA’s request to processors to accept ‘distressed kills’ of pigs on a liveweight basis to avert a catastrophic collapse of the Standard Pig Price (SPP) and asked him to convene a roundtable of processors, retailers and producers to address the situation.

Mr Mutimer thanked the Defra Secretary and his team for the ‘huge effort’ that went into developing the package of measures announced on October 14. He acknowledged that some of the measures, especially sourcing butchers and getting them operational will take time to take effect.

But he also alerted Mr Eustice to the NPA’s concerns about the other schemes, how they may be used and the impact that this will have on the sector.

PSA concerns

He pointed out the purpose of the Private Storage Aid scheme was to provide a simple mechanism for the storage of minimally butchered pigs to encourage a rapid increase in the number of pigs taken off farms to begin to alleviate the ever-growing backlog.

“Since the PSA has now been altered to allow the inclusion of boneless joints, we understand that some processors will not now use PSA until the butchers on temporary visas have arrived in the UK, expected at some point in January,” Mr Mutimer said.

“This will enable them to use the resource to de-bone product and place it into storage until summer 2022 when there is expected to be a drop in supply. The PSA, therefore, rather than helping farmers reduce pigs on farm, will only serve to help processors out of a supply issue.

“This does not therefore address our immediate crisis of a welfare cull and will put further downward pressure on the pig price at a time when feed prices and other costs continue to rise.”

Mr Mutimer also expressed concern about the additional kill bonus, which the bigger processors have told the NPA won’t be used because they cannot encourage their staff to work additional shifts.

“They have also said that the £3 per pig offered was not a large enough incentive so we would ask that Defra considers increasing this amount in order to encourage the measure to be used and pigs taken off farms,” Mr Mutimer added.  

Distressed loads, discounted values

An added complication is that some processors have been taking ‘distressed loads’ of heavy pigs from farmers at around 50% of their market value. However, these prices are being fed into the SPP reporting mechanism, which is crashing prices even further.

For every distressed kill, the SPP drops by about 4p/kg.

If one processor, encouraged by Defra to take additional pigs, does so on this basis once a week, the NPA predicts the SPP will be £1.17/kg by Christmas - with a current cost of production of £1.80/kg, pig farmers will soon run out of cash to feed their pigs.

Mr Mutimer said: “Defra did not stipulate that pigs being taken into either PSA or additional kills be paid on the price that they were originally contracted at, so this may well exacerbate the situation.

“I am sure you would not wish your well-meaning packages designed to push more pigs through the system to be responsible for the crash of the SPP and the resulting carnage.

“We have asked processors to buy these distressed loads on a liveweight basis as if they were buying from markets, which we understand is perfectly legal, to prevent these prices going into the SPP and we would appreciate your support in encouraging this solution as they are yet to respond.”

Mr Mutimer went onto request that Mr Eustice chairs a roundtable of processors, retailers and producers to ‘take stock, properly assess whether the measures are working and agree further approaches that will alleviate the backlog of pigs on farm’. He also invited him onto a farm ‘to see first-hand how this on-going crisis is impacting British food producers’.

Mr Mutimer told Mr Eustice that 14,000 healthy pigs have already been culled on farms and sent for rendering because of the sheer lack of space, while 27,500 sows have been lost from the national herd.

With farmers losing an average of £25 per pig equating to an overall loss of £130 million in the first six months of 2021, and the second half of the year set to be as bad, if not worse, the NPA fear that many existing pig farms will not survive unless the package is implemented as intended.