What will 2023 bring after the hardest of times for the British pig sector?
29th Dec 2022 / By Hugh Crabtree
NPA vice-chairman Hugh Crabtree sets out his hopes for better things ahead in 2023, after the hardest of times for the UK pig sector.
All voices of commentary are agreed: these have been the hardest times experienced by the UK pig sector in living memory.
Speaking as 'a lifer' in this industry, that would certainly be my view. To witness, from the comfort of a supplier’s position, my customer base picking up all of the risk and cost of circumstances well beyond their control has been sobering.
My own business is small with a relatively low overhead. Labour is our biggest cost but it is able to turn its hand to every task required. In recent years we have prepared for a major marketing campaign which has been delayed over and over by lack of development conclusion.
Whilst this means we have cash on hand we will also witness commercial losses for the first time in over two decades.
If the tap of sales revenue was turned off completely, like our customers we’d survive for a while but there is no way we could hold out against such punishment as is being meted out to pig producers. Something like 18% of the national herd has gone – all within the independent producer segment of the market.
It’s probably not all over yet and for suppliers this is not good. Fewer businesses, fewer decision makers, less business and the inevitable shrinking of the whole infrastructure of the industry.
Of course, there are independent producer businesses out there with acreage, good contracts and top flight production management able to weather the storm. But even the best and least leveraged businesses have had to tread water.
Investment in facilities
At a time when regulatory demands in crease with respect to animal health and welfare and the pressure on agriculture to achieve net zero mounts; the last thing you want is a halt in investment in facilities improvement, staff training, IT systems and development. It turns out only 7% of our pig building stock is at 'state of art'.
That means 93% of UK pig buildings are in need of refurbishment at some level at least and more likely complete replacement. You can’t do that without the cash and confidence of business owners and their banks.
The gap between record feed prices and market returns has been falling but it is constrained by much lower pig prices in mainland Europe. Consumers want local produce; processors can source local produce; retailers want local produce; but they simply won’t pay enough for it.
All markets are segmented. You can have cheap or expensive anything. It all depends on the value proposition of the goods in question. That’s what sets the price position. Apparently, the value of our local produce – high welfare high health well looked after pigs – is not as robustly embedded as we’d like to think.
And to cap it all, we can’t use levy money to promote the most obvious delineator: its Britishness. Crazy!
This means retailers can dip and dive at will. Claiming support of British farmers on the one hand while stocking their shelves with higher margin produce more cheaply sourced on the other. They are past masters of it which is why they never, ever report losses to their shareholders.
Better times ahead
Looking forward, for those that have held on there will be better times ahead in 2023 but probably not until late spring. For suppliers, we’ll have to be more patient yet as any upturn in the market is not reflected in more business for us immediately. There’s a lag of at least three months.
Assuming government plans to support agriculture by providing public funds for public good; then there will be grants available to improve facilities for more sustainable food production. There will be grants available to support altered production management to allow entire tails and grants for an accelerated move to loose lactation systems.
In this last regard, the UK sector is well on the front foot having successfully demonstrated freer farrowing at commercial scale on many sites. Have cash, will invest and that means pig farmers need to be making money again.
British Pig & Poultry Fair
On a somewhat separate note: what about the sector’s main trade event the British Pig & Poultry Fair? It has been recently announced that it will move to the National Exhibition Centre next to Birmingham airport in 2024.
Some say this move is long overdue but despite the increased professionalisation of livestock production in the UK; how successful in the longer term have essentially agricultural shows been at the NEC? There’s a bit of a history of organisers close to the market growing very successful events and then selling them to events companies who only see the bottom line.
Time will tell of course and it is said there are technical reasons contributing to the move – space constraints for example. However, I visited Eurotier in Hannover this year which likes to think of itself as the definitive livestock industry exhibition in Europe.
To tell you the absolute truth, I was a bit underwhelmed this time. I was told there were 800 fewer exhibitors in 2022 (that’s double the total number of exhibitors at the BPFF) and that was clearly reflected in fewer halls being used and even those in use having quite a lot of space boarded off.
Furthermore, those companies that did exhibit had smaller stands and whilst you might expect smaller businesses to give it a miss, there were notable absences. Forfarmers for example, nowhere to be seen.
I went to check out innovation in production technologies. I’m not sure I saw very much which either means we’ve reached the limit or more likely there’s not enough prime producer investment going on.
Either way, it spells change and challenge of course. The covid pandemic has taught us we don’t need to travel to meetings.
Could it be relatively small sectors like ours don’t need exhibitions any more? Should suppliers just do a better job of meeting their customers a different way? Will suppliers in agriculture have to really grasp the technology of one to one communication?