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PIG meeting: Challenging time for pig producers

4th Dec 2020 / By Alistair Driver

Pig producers are currently facing multiple challenges, with pigs backing up on farms due to problems with COVID-19 in processing plants, while pig prices fall and feed and straw costs rise.

pigs on strawRegional representatives of the NPA’s Pig Industry Group (PIG) painted a troubled picture for producers during the group's latest meeting, held online on Tuesday, with similar issues being experienced across the country.

Tom Allen, from the South Central region, said: “Straw is a worry – prices are extortionate at £150-£200/tonne around us at the moment and there is zero availability. That is going to cause some problems.”

Meanwhile, wet and dry feed prices are ‘shooting up through the roof’, Sally Stockings, from the same region, added.

Rob Mutimer said it was similar situation in terms of costs in the Eastern region, while the availability and price of straw is becoming a big issue, potentially compromising finishing space.

It wa the story in the Midlands, with more pigs on farm and a lot of concerns over straw and feed prices, Sam Godfrey told the group. “The bright spot we have got is on pig health, which is better than it has been for some time - meaning pigs are growing well at a time when we really don’t want them to,” he said.

The Northern and South West representatives said the picture was very similar in their regions, although Phil Stephenson echoed the better news on pig health in the north.

The impact of bird flu restrictions on pig farms was also raised as a concern.

COVID in plants

The group discussed the situation at pork plants and the knock-on effect on farms in depth. The last few weeks have seen a number of plants forced to operate at reduced capacity due to COVID-19 outbreaks, including some of the biggest in the country.

abattoir workers2As a result, many more pigs are remaining on farm that would otherwise have gone for slaughter. The latest AHDB market update shows estimated slaughter for the week ended November 28 was 5,100 down on the previous week at 173,000 head, which is 17,500 head less than the same week last year and 10,000 head below the 5-year average.

As a result, average carcase weights reached record levels in November, topping 88kg, 3.5kg up on the previous year.

With little spare capacity in the system in the busy run-up to Christmas, lots of farms are seeing numbers bulge on farm. The general view of PIG is that most producers are coping for now, but the situation is precarious and, if it lasts for much longer or if a major plant is forced to close for any length of time, the problem could become serious on a lot of farms.

NPA chief executive Zoe Davies updated the group on the work the NPA has been doing with processors, Government and local authorities to educate people as to how the pig industry works and in setting up an industry-Government COVID forum.

This will ensure all parties across the supply chain and in Government are aware of the situation and working together to find solutions, particularly looking at worst case scenario planning should the need arise, she said. 

Pig prices

The EU-spec SPP continues to fall, dropping back by 1.87p to average 152.02p/kg during the week ending November 28, meaning it is now 7.52p below this time last year.

However, UK prices remain significantly higher than pig prices across Europe, notably in Germany, where COVID issues in plants are being compounded by its African swine fever export ban and prices fell again recently to around 106p/kg.

It is a similar story in some other major pig producing countries, with the EU Reference Price standing just below 120p/kg in the week ended November 22. The upshot is that UK prices are coming under intense pressure from cheaper EU pork on offer, according to market analysts.

Pig margins

Meanwhile, with feed costs rising, UK margins ‘could now be entering negative territory’, according to AHDB.

Margins averaged 8p in the third quarter of 2020, 4p/kg down on the second quarter, but prices and costs have risen since then, eroding any positive margin. In October, GB ex-farm prices for feed wheat averaged £180/tonne, £15 (9%) more than the average across Q3.

“The outlook is challenging for the British pork industry currently. Supplies available are testing demand levels, particularly as processors tackle lost efficiency as plants adhere to social distancing measures, while reports indicate pigs are backed up on farms,” AHDB analyst Felicity Rusk said.

“This, alongside the likelihood of more muted Christmas demand and ongoing low prices in wider Europe, will likely keep British prices under pressure in the coming weeks.”

Cull sow and weaner prices are also falling.

Straw problems

Weekly price data supplied by the British Hay & Straw Merchants Association show average prices are typically double year earlier levels, and more in some cases, with availability also a big issue. This is compounding the problem of pigs backing up on farm for some producers.