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Conference Report: Energy Production - A Key Earner for Pig Producers

by 5m Editor
12 March 2008, at 2:25pm

UK - Energy could be the prime earner for pig farmers. In fact, pigmeat production - in financial terms - might simply become a by-product.

This is the view of Martin Barker, managing director of Midland Pig Producers, who was speaking at a producer conference organised by breeding company ACMC.

Martin Barker, MD of Midland Pig Producers beleive energy generation will help UK pig farmers survive.

With the world focus on renewable energy, Mr Barker said that biogas production - converting pig manure into methane and then electricity - was a viable and competitive way forward. His company is currently developing a 'Green circle pig production concept' which is processing the manure from 52,000 finishing pigs to generate £1 million worth of electric annually.

It involves the construction of a three Mega Watt bio-gas plant near to his production facilities in Staffordshire that will also process 'kitchen' and food industry waste, that would otherwise go to into landfill. As a service, the food waste processing element will also generate income. Landfill disposal fees for this product is usually around £65 per tonne and the biogas plant is more competitive.

By-product Value

There is also the by-products of the process - a valuable fertiliser - which also has a cash value. Midland Pig Producers (MPP) is currently arranging agreements with local farmers whereby they are supplied with free seed and fertiliser and in return sell their grain to MPP at prices reflecting the value of the inputs. The fertiliser should be sufficient for 2,000 hectare of arable land producing enough grain for 15,000 tonnes of pig feed.

Mr Barker said that survival might depend on pig farmers producing energy and such a system could make pig farming profitable again.

He said that most of UK land is now a NVZ (Nitrate Vulnerable Zone) and many farms have IPPC regulations to contend with. Converting feed into meat produces a by-product which is about 70 per cent nitrate. Importing feed and nitrogen fertiliser increases this burden. Oilseed rape production, for instance, requires 150 per cent more nitrogen than barley, so utilising home-grown feed for pigs with home-produced fertiliser made environmental sense.

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"Converting feed into meat produces a by-product which is about 70 per cent nitrate. Importing feed and nitrogen fertiliser increases this burden.."

Martin Barker, Midland Pig Producers

The bio-digester would produce heat for piggeries as well as cheap electricity for milling the grain. In addition to reducing nitrates grain produced within the Green Circle' concept would cut food miles, further reducing the carbon footprint.

Adapt to High Feed Prices

High and volatile raw material prices are likely to remain for the foreseeable future, so pig farmers would need to adapt to live with them, said Hugh Burton, raw material manager for Associated British Nutrition.

"Grain stocks are at an historical low, and there are no easy answers," he warned.

'Price risk management' would become increasingly important to the pig industry. It was currently very difficult or impossible for producers to control the end price of their product and companies such as ABN are not able to exert significant influence over the cost of feed ingredients. He said some method of linking the two could be appropriate and could involve setting up a pig futures market - as happens in the USA.

Forming closer working relationships with retailers and pig buyers so that end-product price could be linked to the cost of feed would also be an advantage and a means of helping processors and retailers add value to British pigmeat products purchased by consumers would also pay dividends.

However, there was some hope. A greater availability of co-products from the biofuel sector could open up the raw materials market and may help to ease formulation costs. On farm feeding practices may have to change to accommodate and benefit from these materials, but they did offer opportunities for cost reduction.

Mr Burton explained how, for example, increased bio-ethanol production would result in greater availability of distillers' grains. Traditionally these entered the ruminant feed market, but there could be opportunities for mono-gastrics, such as pigs. Also, glycerol, a by-product from bio-diesel production, was traditionally used in human food and cosmetics but, it is a good ingredient to incorporate in pig feed. While these ingredients would not be cheap, they would be relatively inexpensive in relation to cereals

Mr Burton said that ABN's own role was changing from a company just selling feed to one that provides a wider service through its ability to deal with the intricacies of the raw materials market. Incorporating these co-products correctly and explaining their use to producers was increasingly important and although compounders would be able to use these ingredients successfully in diets, home mixers would need to seek nutritional advice, suggested Mr Burton.

Urgent action needed to secure supplies

Mick Sloyan, Chief Executive of BPEX told the audience that retailers needed a more strategic approach to securing the future of their British pigmeat supplies.

"If they take action now and pass more money down the chain to producers then an exodus from the British industry can still be avoided," he said

"There is no Plan B. If they don't do this then retailers - and consumers - will face the consequences of high prices through lack of supply. We will see the continued contraction of the national herd and the reduction in high welfare pig production," he added, firmly.

Conference Speakers (l to r) Hugh Burton, ABN; Mick Sloyan, BPEX; Matthew Curtis, ACMC and conference chairman; Martin Barker, Midland Pig Producers.

The situation is serious the UK industry was culling sows at levels topping 40 per cent up on the previous year and the continued high cost of feed was now beginning to bite in other countries. The average herd size of 18 European countries is down by 4.5 per cent with some, such as Poland down by a massive 13 per cent, said Mr Sloyan.

Britain's pig herd, although half the size it was 10 years ago, had ironically, started to recover during the past three years. Productivity, measured by finished pigs produced per sow a year, had increased from 17.5 to over 21. However, producers were now faced with a 35 per cent increase in total production costs and could not survive unless retail prices increased and the benefits were passed back down the line.

"This would give producers enough confidence to stay in business and take advantage of the upturn in the market when it come," said Mr Sloyan. "It can be done. Retailers can do this while still holding onto their 40 per cent margins. Egg prices have risen by 15 per cent and people are still buying eggs," he pointed out.

Waiting for supply-and-demand to run its course may prove to be too late.

5m Editor