UK/EU Producer Prices

United Kingdom producer prices have been positively influenced since the beginning of the year by a combination of declining throughputs at abattoirs and by the weaker sterling exchange rate relative to the Euro. Sterling continued to weaken in April, so that by the end of the month the value of the Euro was at a 4-year high of just over 69p.

In the first three months of 2003 the average price increased by 17p/kg, reaching 109p at the end of March – the highest since August 1997. However, prices slipped back during April as the developing gap between British and continental European prices is likely to have encouraged an increase in import volumes. The average price in the week ended 19 April was 105p/kg, still 7p more than a year earlier. Some improvement in spot prices in the week ended 19 April suggests that prices may not fall much further over the next few weeks.

Weaner prices also fell back slightly during April, in line with weaker finished prices. Nevertheless, acute shortages of weaner supplies, resulting from breeding herd contraction and recent problems with sow infertility, mean that prices are still well up on the beginning of the year. The average price of 30kg weaners in late April was around £37 a head, £8 more than at the end of 2002. Reduced supplies have also led to much firmer cull sow prices, although these also weakened a little in April.. Cull sow prices will also have shown a particular benefit from the weaker sterling, as around 95 per cent of sow meat production is exported. Prices averaged around 55p/kg dw in April.

EU prices in Euro terms averaged about five per cent lower in the middle of April than a month earlier, although there were some fairly sharp contrasts between individual member states. Danish prices were little changed although most member states saw weaker prices. French and German prices fell by 4% over this period while prices weakened by 6% in Spain and 11% in the Netherlands.

The decline in sterling terms has been less marked. Consequently there has been some lowering of the UK:EU price differential, although it remains high in historical terms. The premium reached a peak of 26p/kg at the end of march but by the week ended 20 April was down to around 21p.

Slaughterings

Weekly UK throughputs reached a low point of 182,000 head in June 2002 but showed some recovery in subsequent months, reaching 212,000 head in November. Average throughput fell back slightly to 198,000 head in December, but this was due to a short Christmas working week. Throughputs continued to fall in January, averaging 183,000 a week. Although this was not unsurprising in the first half of the month, as supplies had been pulled forward for the Christmas market, weekly throughputs remained low in the second half of the month. Throughputs fell further to around 179,000 a week in February and March, while MLC estimates for April indicate that throughputs again fell, to around 174,000 head. More abattoirs have now moved to only slaughtering on a four-day week owing to lack of supply.

Total United Kingdom slaughterings have fallen less markedly than GB slaughterings. This is because of an increase in Northern Ireland, where the breeding herd has been more stable than in Great Britain. Northern Ireland slaughterings have also benefited from an increase in live pig imports from the Irish Republic.

The actual cause of the decline in supplies in Great Britain since the start of the year is unclear. There may well be no single predominant reason, but a number of factors, including:

• Reports of some sporadic increases in PMWS incidence in the last couple of months.
• Some disruptions to breeding patterns and performance arising from a significant number of producers depopulating and then repopulating last year.

There has also been a developing sow infertility problem since last Autumn, although the impact of this on clean pig slaughter levels is only now beginning to kick in. But, whatever the precise cause, the impact on apparent sow productivity (measured by pigs finished per sow per year) has been dramatic, as the following graph shows.

Consumption

Household fresh and frozen pork purchases were unchanged in the 12-week period ending 30 March compared with a year ago. Although there was an apparent fall in bacon purchases in the latest 12 weeks, at this time last year bacon sales were particularly high.

There continues to be growth in overall consumption of processed pig meat products. Sales volumes of frozen pork products increased by 12 per cent, pork sausages by seven per cent and ham by five per cent.

A direct marketing campaign has just been launched by the British Pig Executive (BPEX) targeting one million homes to boost the consumption of pork. Each of the households will receive a recipe swatch that contains information on pork as a healthy and quick choice plus tips on the perfect roast pork. It also gives details of the British Meat Quality Standard Mark, information on lesser known cuts of pork used in the recipes and a money off offer.

The first phase of a door drop to one million households is now under way. Following identification of a fortnightly pattern of buying habits of the target group the mailings will be repeated a second and third time after fortnightly intervals using similar but not identical material.

The Animal By-Products Regulation

New EU legislation is due to come into force on 1 May 2003, banning the routine on-farm burial and burning of animal carcases. With the only exceptions in the UK being the remote areas of the Highlands and Islands of Scotland, the legal methods of disposal will be rendering or incineration. On-farm incinerators will be permitted if they conform to standards and have been approved. Alternatively, local knackermen can continue to collect fallen stock.

Due to the foreseen increased costs to farmers that the new regulation may cause, the government has proposed a low cost voluntary scheme to which farmers may subscribe. The scheme will use approved contractors to undertake collections. The proposed annual membership fees are:

• Less than 100 pigs on a holding (20 cattle) - £50 per holding
• 100 -1000 pigs on a holding - £100 per holding
• More than 1000 pigs on a holding (200 cattle) - £200 per holding

(Mixed holdings are calculated on cattle equivalents 1 bovine = 5 pigs/sheep/goats/deer & 50 poultry)

Whilst the government will subsidise the scheme in the first instance, the aim is that the scheme becomes self-financing. Hence, it will only be run if there is sufficient support from farmers. A letter has been sent to all livestock farmers for them to register their interest in the scheme. Further information may be obtained by calling the helpline: 08459 8507070

World Pork Congress 19-20 June

The World Pork Congress is being organised by the British Pig Executive (BPEX), the Meat and Livestock Commission and the International Meat Secretariat. The Congress is a business-orientated, forward looking, strategic event that will help everybody throughout the pork production and marketing chain plan for the future.

The panel of speakers includes the Chief Executives and Senior Executives from virtually all of the world’s major pig producing and consuming countries including the United States (Smithfield Foods), Canada (Olymel), Brazil, China (Shineway), Japan, Russia (Cherkizovsky), Denmark (Danish Crown), Netherlands (Dumenco), Germany (Westfliesh), France, Spain, Poland, Hungary and GB. Papers will include Production and Market Trends, Technical Developments, EU Enlargement, Trade Issues, and Marketing and Consumer Trends.

Details on the programme and speakers along with booking forms for both the Congress and accommodation can be found on the Congress website. If you would like to know more, please contact Andrew Knowles on +44 (0)1908 844708.

EU Pig Census Results

The provisional results from the European December 2002 pig survey show that total pig numbers throughout the EU were only slightly down (0.6 per cent) on 2001. Pig numbers declined in Spain, the Netherlands and the UK but were relatively stable in Denmark and Germany, even increasing in Italy. Breeding sow numbers were little changed, at 12.35 million head, with the contraction occurring mainly in the number of slaughter pigs. Sow numbers have continued to decline in the Netherlands and the UK. However this has been offset by increases in Denmark and Italy.

A 0.6 per cent decline in slaughterings is forecast in the EU for 2003 compared with 2002, to 200.9 million head. In addition to lower slaughterings in the United Kingdom, declines are also forecast for the Netherlands (-6%), Ireland, Austria and Portugal. Danish and German slaughterings are both forecast one per cent higher. No forecasts for Italy and Spain have been released, although the census results indicate some expansion in Italy and a small decline in Spain.

Source: MLC - May 2003