A 30% hike in the cost of feed is causing most pig producers to be staring at big losses once again.
In a move that replicates the opening salvo of its highly successful ‘Pigs Are Worth It’ campaign of 2007/08, the National Pig Association has written an ‘open letter’ to the trade which was published as an advertisement in the trade press in October 2010.
The open letter followed a series of private letters from NPA chairman Stewart Houston addressed to the major multiple retailers urging them to remind their pork buyers of the importance of supporting British pigmeat production. This action was prompted after the cost of pig feed – which accounts for 50% of total production costs – had risen 30% almost overnight.
The increase has hit about 80% of pig farmers who are again struggling to realise a profit on production. Current buying prices as measured by the Deadweight Average Pig Price (DAPP) show that producers are already losing money on every pig they sell. The DAPP has been falling steadily in recent times. For every 2p fall in the DAPP, producers lose almost an additional £2 per pig.
The pig industry has been operating at a loss in almost every year over the past decade. The situation came to head in 2007 when a sharp increase in world commodity prices pushed up feed costs and the industry faced wipe-out. As an industry, pig producers were losing £6 every second - £3.5million a week
The industry launched a make-or-break campaign, promoting the high welfare standards of British production. Research undertaken at the time showed that consumers were willing to pay extra for quality assured pork and pork products. On the back of that, the industry launched its ‘Pigs Are Worth It’ campaign urging retailers to pay a fair price to farmers and to ensure that processors passed the increase back down the supply chain.
Retailers responded to the campaign which was credited with saving many producers from going out of business.
During 2009, the industry returned to profit, helping to claw back some of the sustained losses but also enabling producers to invest in more efficient systems.
The latest hike in feed costs has hit at the same time that retailers are putting the processing sector under considerable price pressure. This has had a knock-on effect of depressing prices paid to producers (as indicated by the falling DAPP) and is also sucking in an increase in cheaper imports.
This has prompted the NPA to write to all major retailers calling for all parts of the supply chain to demonstrate that the lessons of the 2007-08 crisis have been learned, reminding them of the outcomes of the Government-sponsored Pig Meat Industry Supply Chain Task Force and stressing the importance of supporting British pigmeat production.
‘Pigs Are Still Worth It!’ after all.
