'Watch this space...' Tulip's Andrew Saunders urges patience on pig prices
16th May 2019 / By Alistair Driver
Tulip agriculture director Andrew Saunders has urged producers to be patient over pig prices.
Mr Saunders told delebgates at the Pigs Tomorrow conference this week that UK prices had been slow to rise on the back of higher demand from China due to over-production in the first few months of the year.
The SPP rose by another 1.26p last week to reach just short of 1.43p/kg. Weekly slaughter was down 5,800 head on the previous week, reflecting reports that supply continues to become tighter, AHDB said.
Despite the latest increase, the price is still just over 4p below last year’s level, and still well behind the prices seen in major EU pig-producing countries, which soared on the back of increased demand from China.
The EU reference price soared from 117p/kg in early February to over 146p/kg now, while UK prices have remained largely static during the period, prompting anger and frustration from UK producers, who have been seeking answers.
Mr Saunders addressed this frustration head on when he spoke at the conference in Leicestershire, blaming the slow pace of increase in the UK partly on Brexit stockpiling.
He pointed out that UK producers have generally enjoyed a price premium over imported pork from the likes of Denmark, the Netherlands, Germany, Ireland and Belgium, while UK prices have been relatively stable, compared with the ‘great swings in European prices’.
But that gap has closed over the past few weeks, which has been challenging to us as processors, he told delegates.
“European pigmeat is getting sucked in to China, making that product more expensive in the UK. The UK pig prices will respond in due course,” he said.
“Why have they not responded so far? Mainly, because all pig processors probably killed far too many pigs in January and February this year. We had slow and weak demand and we filled our freezers up - there was no free freezer space in the UK whatsoever. We were all preparing for March 29, which didn’t happen.
“Over the last six to eight weeks, a lot of that frozen pork has been pulled out to meet the changing market circumstances.
“So watch this space. I think we will see pig prices responding.”
NPA chief executive Zoe Davies put him on the spot during a question and answer session. She said farmers had ‘heard a lot about these mythical storage facilities that were keeping prices down’ and asked when these supplies would be exhausted.
Mr Saunders said the industry nearly ‘ran out of ability to freeze come the end of March’. “We were probably killing 15-20% too many pigs in January to March relative to sales. In the perfect world we would not have killed those pigs as there was no demand for them.
“All our major competitors would say the same thing. We stocked up and kept on going with the view that hopefully something was around the corner. That freezer volume tied up millions of pounds. I know this happening across Europe, but that is now starting to go out against backdrop of what is happening in China.
“We are still putting stuff in and we have only just managed in the last two or three weeks to make a net minus on our freezer stocks.
“The German price started moving up eight weeks ago and that is really starting to take effect now. We will see those stocks decline.”