Q& A: What is happening in the pig sector?
9th Oct 2021 / By Alistair Driver
We have put together a Q&A to explain what is happening in the pig sector, the main reasons and possible solutions.
What is the situation on farms?
Thousands of pigs on farms across the country are backed up on farms, primarily because of a lack of processing capacity in pork plants due to labour shortages. Many farms have seen 25% fewer pigs slaughtered each week, which has seen numbers rapidly stack up on farms.
It is difficult to gauge the overall number, but the NPA estimates it to be in the region of 120,000?
The situation is worse in some supply chains than others and on some farms than others. In many cases, contingency plans have now been exhausted and there is no more room for pigs.
The NPA is aware that in a handful of cases, culling has begun on farm to ease the pressure. In some cases, farmers are using the knackerman, rather than doing it themselves or asking staff. Some producers have also stopped mating some sows, although this will take 10 months to feed through in terms of reduced production.
The very real concern is that if nothing is to fundamentally ease the backlog, this small-scale thinning out of herds, will turn into a mass cull - the NPA is adamant this shouldn’t happen on farm.
This is first and foremost a pig welfare crisis and the situation is extremely distressing on farms up and down the country.
What is being done to ease the backlog in the supply chain?
Some processors are putting on extra kills, for example on Saturdays, with pigs exported with minimal butchering to markets in Asia paying relatively low prices. In some cases, this has affected the main measure of the UK pig prices, the Standard Pig Price (SPP), which fell by nearly 5p last week.
What else are pig farmers have to cope with?
This is far from being the only problem pig farmers are having to cope with at the moment. The pig sector is also in the midst of a financial crisis.
The first six months of 2021 saw the industry record its worst financial performance on record, with producers losing on average around £25/pig over a prolonged period, mainly due to record costs of production, underpinned by high feed input prices. The current quarter has seen costs remain unsustainably high, while the pig price has deteriorated, due to the current constraints in processing plants and also plummeting EU prices.
Due to the backlog, pig farmers are now, in many cases receiving less money for their pigs, and also having to feed them more and for much longer, at huge cost.
Other industry problems include bans on exports to China from certain key pork plants, the collapse of the cull sow price due to oversupply in Europe and a big drop in EU exports due in part to new Brexit checks introduced in January, as well as oversupply in the EU and a fall of in China shipments.
Meanwhile, the Government has just announced the equivalent checks on EU imports will not be introduced in the UK until next July, described by NPA as 'another kick in the teeth for the industry'. Imports of cheap EU pork appear to be coming into the country in greater volumes.
Producers are also concerned about new rules and regulations that are coming down the track that could bring about major new costs, with minimal return.
The NPA is aware that due to these pressures, businesses with 27,500 sows between them have left the industry in recent weeks.
What is causing the pig backlog?
There is no question that the primary reason for the growing pig backlog on farm is labour shortages in processing plants, in particular of skilled butchers.
The big processors are seeing huge vacancy rates, often in areas of high unemployment. British Meat Processors Association (BMPA) chief executive Nick Allen said, from a workforce of around 97,000, meat processors were approximately 15,000 people short, equating to about a 15% vacancy rate. Of these, 10-11,000 needed to be skilled or semi-skilled, he said.
This has been reinforced by two major pork processors who have reported vacancy rates of, in one case, 15%in its abattoir and processing sites, while another, Pilgrim’s has reported shortages of around 10-15%.
These vacancies in some cases are happening in cities where there are high unemployment rates.
The problem is that a lot of EU citizens that used to work in these have retuned home due to a combination of COVID-19 and new rules that make it harder to live and work in the UK, including changes to UK ‘settled status’ rules in July.
Is it about low pay and poor conditions in plants?
The meat industry insists this is not about low pay and poor conditions, pointing out that the vacancies are generally for skilled workers that earn good salaries. The BMPA said wages have risen significantly recently but it is still proving impossible to attract UK workers in sufficient numbers.
“We have taken numerous steps to address the labour shortages over the last few months, including offering increased pay, considering more flexible working patterns and offering potential employees a range of industry-leading benefits and incentives,” a Pilgrim's spokesperson said, comments echoed by other processors.
While recent policies resulted in a sudden reduction in the number of EU workers, the meat industry insists it will take time to move to a new labour model.
“It will take time to reduce the UK’s reliance on overseas workers in the pig sector, largely because of the time taken to upskill workers,” the Pilgrim’s spokesperson added.
Are there any solutions?
The NPA and other industry bodies have been calling on the Government to introduce up to 10,000 temporary visas to enable more butchers to enter the country and help ease the backlog, at least in the short-term.
The industry is also calling for a relaxation of the English language for butchers coming into the country, which is proving to be a barrier to attracting staff, meat plants say.
The meat industry is clear that if these measures are introduced there are workers, mainly from outside the EU, including in South America that could be brought in at relatively short notice.
Is labour the only issue?
As mentioned earlier, a ban on exports to China has not helped the situation, particularly in some plants, although in many cases alternative outlets have been found.
More pigs were contracted for the Chinese market, but this trade has been badly hampered by the fact that three major UK plants gave up their licences during COVID outbreaks, on the advice of Defra - but these have not been reinsated. The challenge since has been to find other Asian markets with minimal butchery with minimal butchery for these pigs, albeit at much lower prices.
The NPA has also written to retailers urging them to back British pork, rather than turn to EU pork as falling prices make it more attractive. This is particularly the case where EU pork is being imported and taking up valuable butchery resource.
What about pig production?
Pig slaughterings are about 4% up on last year so far this year. However, with so many variables, including COVID and Brexit, and then with the first part this year spent catching up on last year’s backlog, year on year comparisons.
But the key point is that current productivity would be entirely manageable, if labour supplies were at full capacity.
“What we need to worry about is how many pigs we have to slaughter this year and what the capacity is. I really believe the constraining factor on processing is the lack of skilled workers in those main processors,” AHDB analyst Duncan Wyatt said at the recent Pigs Tomorrow event.
He said there was no reason why, in normal times, processors would not have that capacity to meet throughput coming through plants.
Average pig carcase weights are also up this year, and a big reason for this is the pig backlog that meant getting heavier on farms, requiring farmers to feed more pigs that are heavier than would usually be the case, adding massively to costs.
Average carcase weights, recorded by AHDB, topped 90k again in late-September, 4kg higher than a year ago when they were also on the rise, and 4kg higher than early-August, less than three months ago.