2002: The year the UK pig industry didn't disappear

By Dr John Strak - This month’s Strak report bring news of UK competition from the beef and lamb industry and considers the state of the UK pig industry during 2002.
calendar icon 26 January 2003
clock icon 4 minute read
Dr John Strak

Dr Strak's views on the UK and global pig markets are produced in Whole Hog every fortnight. For more details click the link at the foot of the article.

I start 2003 and my forty second Strak Report with some news about the competition and a reminder that things weren’t quite as bad in 2002 as they might have been.

The competition this time is close to home – it’s the beef and sheep producers who have shown the pig industry how to move quickly. EBLEX – the new beef and lamb executive for England modelled on BPEX – has been in existence for just a few months. But it has already announced that it will be setting up a new website and price reporting service this month that will feature a full range of market prices including auction, dead-weight and retail. The site – www.eblex.org.uk will be updated daily so it will remain bang up to date.

Quite right too because understanding prices, supplies and demand are a crucial part of how farmers make good business decisions. You have heard me say this before, of course, although not in relation to the red meat sector.

The last time I made an observation about price reporting systems was in December 201 when I complained that the UK pig industry was slow in coming forward to organise a better price reporting and analysis system.

I that Strak Report I said, “..Now you start to see why pig prices in the UK are poorly understood.... too little information on supplies, qualities and demand.. and not enough economics..”. And, as you read this at the beginning of 2003, nothing much has changed. But at least this column can offer an insight into what actually happened to prices and the breeding herd in 2002.

Chart 1 shows that the reported pig price has been in a slow decline all year in the UK.

Now, it may be that some farmers are receiving much better prices than the reported prices (though favourable contracts or quality premiums)but even if this is only a minority the key observation is that, for most of the year, the pig price was 96.6 pence/kg on average. That’s above the cost of production on most farms and explains why the sow herd stopped contracting in 2002.

Chart 2 illustrates that the herd size actually increased between December 2001 and June 2002 and the June-June rate of contraction slowed to an annual rate of c.3%. Simple really, price goes up and producers stop going out.

Over the full twelve months it looks like the UK pig price held up quite well – especially in comparison to some places in the world.In a previous Strak Report I discussed the relationship between UK prices and the global pig price which has been in a strong downward trend since April 2002. That will now be a key relationship in 2003.

In my Christmas rant about the need for better price reporting in December 2001 I ever dreamt it would be EBLEX that would pick up the gauntlet. Good luck to the beef and sheep producers who benefit from anything EBLEX does to improve things in the red meat market. I look forward to the other white meat considering how it can keep up with the pace that EBLEX has set.

And,for those doomsters who thought that the UK pig industry was ready to disappear down the plug hole, it seems that 2002 was not quite the black hole they feared.

See you next month

Reproduced courtesy

Source: Strak Report - January 2003
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