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Retailers will hold price in New Year

by 5m Editor
24 December 2003, at 12:00am

UK - Despite tumbling prices on the continent, British pig prices will not drop in the new year. This follows a last minute campaign by NPA chairman Stewart Houston to persuade leading retailers to support British quality.

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The reasons are different but it's a re-run of exactly what he was doing at this time last year. "It convinces me more than ever that we simply have to find a better way of selling our pigs," he said today.

Morrisons, Asda and Tesco say they recognise the difficulties facing British producers, from over production on the continent and rising feed costs.

The agreement with individual retail chains to hold prices follows a frantic round of calls this week. "The tone of the talks reflected the growing confidence we have in each other," said Stewart Houston.

"We recognise each retailer's desire to remain competitive with other retailers and they recognise that pig producers have stopped wingeing and are seeking to move forward by working more closely with their customers and by improving productivity through initiatives such as the national health and welfare plan."

Britain's leading retailers have promised Stewart Houston they will maintain British pork as a premium product, and by so doing will ensure prices do not drop below current levels (around 106p) in the new year.

"This isn't a solution but at least it is maintaining the price and gives us time to explore how we can meet the challenge of high feed costs in 2004. We will be having follow up talks early in the New Year.

"My job is to ensure that during the coming shakeout it is British producers who survive, rather than Danish, Spanish, Dutch and French producers."

Stewart Houston said that following publication this month of BPEX's report on rising feed costs, the leading retailers recognised that British producers faced a new and serious cost of production challenge.

"The retailers need fresh British pork - particularly for their premium brands - and we need a sustainable price to allow us to keep producing it. Clearly it is in the interests of both sides that we work together on finding an answer.

"Their individual commitment to preventing a price fallout in January and February allows us time to find more effective, longer term solutions.

"Whether we will be able to persuade them that the answer lies in three-way retailer-processor-producer contracts, remains to be seen, but it would be tragic if the British pig industry declined further during 2004 for the lack of a bit of innovative thinking."

Following Stewart Houston's charm offensive this week, Morrisons, Asda and Tesco have separately agreed to work with suppliers to prevent a price drop.

Stewart Houston was keen to point out today that this agreement demonstrated increasing levels of trust between producers and retailers.

"It doesn't negate the direct action of the past because that was a considerable factor in getting both sides to start talking to each other in a civilised manner, but it does show that the pig industry has come a long way in the past few years."

Although most supermarkets sell only 20 percent of the pig carcase as fresh pork, they have a considerable influence on total pig price as they buy in sausages, hams and other products from companies that process the shoulders and legs.

Therefore they could further underpin the British price by talking to their suppliers of processed product and explaining the current pressures on British pig producers.

"The fact is that every ounce of pork sold in supermarkets this Christmas, no matter where it comes from, will have been produced at a loss. This new deal with the leading supermarkets will at least stop the price falling any further.

"We particularly welcome their promise not to maintain prices at the expense of the abattoirs - because the abattoirs cannot afford to be squeezed any more than we can."

Source: National Pig Association - By Digby Scott - 24th December 2003

5m Editor