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Grain prices… pain prices

by 5m Editor
20 January 2004, at 12:00am

UK - "The increase in cereal prices may be a lifesaver to you arable farmers but it poses us a problem," said NPA chairman Stewart Houston when he addressed NFU council on Monday.

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"Once these increases are reflected in the price of our compound feed rations we are looking at cost of production increases of 15p to 19p a kilo… which is a massive 311 to 314 a pig.

"And of course the pigmeat market works separately from the feed market, so we are in dialogue with retailers to persuade them to adjust prices. It is a big task when we are already working with a premium over the continental price.

"But it is our job to see that the feed price pressure is reflected in a reduction of the Dutch, Danish, French and Spanish herds, not the UK herd."

Bringing NFU council members up to date on the pig industry, he said in mid-1998 the national herd stood at 815,000 sows and producers were used to living with a pig price cycle.

Since then, the national herd had fallen to 500,000 sows where - for the moment - it had stabilised. He listed some of the body blows that had been dealt the pig sector…

  • In 1998, massive over production in Europe, the loss of the Russian export market, and a 20 percent currency disadvantage… "just when we had emptied our piggy banks meeting unilateral UK welfare legislation."

  • Swine fever and foot and mouth followed, cutting off export markets and imposing difficulties through movement restrictions. "Working only with an internal market we missed the European market cyclical upturn our competitors enjoyed."

  • Wasting disease (with, in some cases, mortality running at 20 percent) appeared during the swine fever movement restrictions in East Anglia and during foot and mouth restrictions in the north.

"Although we have stabilised the national herd at 500,000, poor production has led to a reduction in slaughtering from 300,000 a week to 165,000, sucking in cheaper imports to fill the void."

To pull itself out of its difficulties the industry had made a conscious decision to work together - allied trades, producers, processors and retailers - to formulate a strategy, as outlined in BPEX's Road to Recovery and NPA's Acid Test.

Stewart Houston said the foundation blocks of this strategy were…

  • Differentiation of the British product from imports, vis-à-vis production systems and whole chain assurance.
  • Segmentation of markets, looking for premium products.
  • New product development to add value.
  • Reductions in cost of production to improve competitiveness.
  • Encouragement to all in the pigmeat chain to work better together.

"Marketing product differentiation through our Quality Standard Mark and the Little Red Tractor has helped us keep a premium over imported product, but this is not enough on its own. We must reduce cost of production and add value," he said. "For example we have developed pig management and butchery techniques to take our pig weights up from the current average of 74kgs deadweight to over 90kg. This is an example of sharing benefits along the chain."

The industry had also embraced government's proposed health and welfare strategy and built on the concept by introducing its own plans to improve health and welfare on pig units. Endemic diseases were currently costing the industry 350million a year, equivalent to 36.00 a pig.

And the industry had developed its Zoonoses Action Plan which was designed to reduce any salmonella risk to consumers. After a year building up information, producers would now be allocated a status and help was at hand for those unfortunate enough to fall into the "improve" category.

A further area of effort had been renegotiating export certificates to third countries, with success in Japan and South Korea, but there was more work still to be done.

"Running parallel to all this is our day job, dealing with government and European consultations by the score. I don't propose to go through them all, but it does give me the opportunity to thank our producers for their input to these consultations and to the NPA staff during five difficult years. They have been supported by NFU staff in this building and in Brussels and our synergy with BPEX also helps us to provide a good service to our members."

In conclusion, Stewart Houston thanked NFU for the support it had given NPA during its formative years and stressed that NPA had now paid of all the money it had borrowed from NFU and had learned to operate within a limited budget.

Source: National Pig Association - 20th January 2004

5m Editor