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Is the EU reference price comparison duping British farmers?

8th Oct 2016 / By Alistair Driver

AHDB Pork has revealed it is working to develop more accurate international price comparisons in response to claims by NPA chairman Richard Lister the current system is duping British farmers.

The current EU reference prices, which are published on a weekly basis by the European Commission, suggest UK producer prices, which are continuing to rise, are lagging about 6p/kg behind the EU average but still carry a premium over the Dutch and the Danish prices.

    ListerMr Lister said the figures, as currently presented, do not paint an accurate and do UK producers a disservice. The reference prices present UK and EU pig prices as if they are comparative when, in reality, most EU countries set prices on a different basis to the UK.

    For example, most pay on hot weight rather than cold weight, which can be a difference of 1.5-3kgs, and most EU factories pay for haulage, whereas in the UK this can add up to £4 per pig depending on distances,while UK farmers also pay the wash-out charge, Mr Lister said.

    Unlike in the UK, EU factories also tend to pay the meat inspection charges (£1.20-£1.45 per pig), while other levies are small relative to the AHDB levy of 85/pig, he added.

    Mr Lister estimated, added together, all of this could equate to EU farmers being 8-10p/kg better off under similar headline prices.

    The current headline comparison suggesting the overall EU reference is just 6p/kg ahead of the UK price (see below) is therefore misleading, according to Mr Lister.

    “These prices are used to try and demonstrate we get a premium over EU prices or by processors to say they are paying too much for our pigs or by retailers to say EU pigs are cheap. I think the aim should be for accurate price comparison because we are being duped,” Mr Lister told Pig World.

    More meaningful view

    AHDB market specialist manager Stephen Howarth said: “Price comparisons between different countries are always challenging, with the factors which Richard alludes to among those which make it complicated.

    “We are currently doing some work to try and understand the different price series better, with a view to coming up with a more meaningful view of how the prices actually paid to producers compare. This will draw on a range of sources to ensure we get the most accurate picture possible.”

    He acknowledged that previous work had indicated the EU reference price tended to overstate (or understate) the gap ‘to some extent’, although it was unclear by how much.

    “We think a more accurate price comparison can be achieved and we are working on it. There will inevitably still be some caveats on any comparison but it should help everyone to understand the true situation,” he said.

    Selected EU Reference prices (p/kg) – September 26

    • Germany – 151.27
    • EU overall – 144.29
    • UK – 138.05
    • Netherlands – 132.88
    • Denmark – 131.07