The UK market situation

Prices strengthened in November following the relaxation of the ban on exports and a considerable UK price premium over the average EU price re-emerged (reaching a peak of 18p/kg).

However UK prices began to move down again in December and by early February had fallen below 90p/kg. Consequently the UK pig industry moved back into a loss situation.

The weaker tone to the market at a time of historically low production was the result of a combination of factors:

• A weakening EU market, arising from some growth in supplies together with a switch back to beef.
• An increase in the volume of low-priced imports (official trade statistics not yet available). The UK price premium has therefore fallen to about 4p/kg.
• Seasonally weak demand for fresh pork and bacon in the period after Christmas, with consumers paying off credit card debts.
• The clean pig meat export trade slow to get re-established.

In mid February, however, the EU market stabilised and some market gains were recorded. Likewise, the UK market appears to have turned. Although the overall producer price in the week ended 23 February was only 0.3 p higher than the year before, spot prices increased by up to 4p. Further price gains were recorded in the following week, with some spot prices breaking the 100p barrier.

Weekly clean pig slaughtering levels showed signs of increasing slightly from August through to early December. However slaughterings fell back slightly in January and February.

A primary cause of the low throughput is, of course, the contraction in the breeding herd. But an increasingly important secondary reason has been a decline in productivity over the past year or two, as indicated by the following graph.

Most of this decline in productivity is the result of PMWS, but the drop seen in the latest few months can be attributed to the changed age profile of sows recorded in the June 2001 census. The increased number of older sows will have had a negative impact on average industry productivity.


The consequence of the build up of older sows on farms is now being seen in high sow culling rates.

From February through to October 2001, sow cullings were at very low levels as the export ban removed the main market for sow meat. Immediately the ban was lifted, weekly sow slaughterings began to rise and this backlog of older sows is still being cleared as their piglets are weaned. Current sow slaughter levels are also likely, to some extent, to be due to producers moving out of pig farming.

	Production indicators< TR>
	Period	2000	2001	2002*
	000 head
Weekly ave clean slaughter	February	257	176	207
Weekly ave sow slaughter	February	7.7	4.2	6.9

Estimates

Average weekly sow slaughter in February 2001 is estimated at 7,000 head. This was the same as in February 1999, when the breeding herd was approximately 25 per cent larger.

Because gilt replacement levels are also low, this implies that the national breeding herd is currently continuing to contract. December 2001 pig survey results, which have recently been published, show that sow numbers, at 547,000 head, were five per cent lower than in December 2000 and nine per cent down on June 2001.

The June 2002 pig results will almost certainly record a further fall in sow numbers.