Asda Support and Good Prospects Against Imports

by 5m Editor
3 April 2008, at 10:21am

UK - The pig industry’s campaign for better prices to offset high feed costs has made significant strides since the London Rally last month, says the NPA.

  • Secretary of state Hilary Benn has voiced his express support for the campaign.
  • The pig price is continuing to rise, in Britain and on the continent.
  • As a result of almost daily briefings by NPA, leading supermarkets are now making serious behind-the-scenes efforts to ensure increased prices are fed down to producers.

In an important move, Asda chief Andy Bond singled out pig producers for special mention. In response to a dialogue between the company and producer Richard Longthorp, he said that he understood that some of his recent comments regarding cost prices about Asda's suppliers had caused concern and particularly in the pig sector for instance.

“We at Asda fully understand and appreciate the problems being faced by the pig sector with the increase in pig feed costs. I would like to reassure them that my comments were certainly not aimed at them. We will continue to do all we can to support United Kingdom pig producers," he said.

“And, while we do not purchase from pig producers directly, I have made it quite clear to all our processor suppliers that I expect to see a significant part of the previously agreed increased cost price which we pay to our processors passed back up the supply chain to the farm level,” he added.

Andy Bond’s last sentence is particularly important. During the campaign so far, increases paid by retailers have not as a rule been passed on in full to producers.

But with a network of producers keeping him informed of price developments, NPA chairman Stewart Houston is now able to have an on-going dialogue with retailers on this issue.

Continental Supplies Fall

Crucially for British producers, the supply of pigs from the continent is shrinking.

Census results for December indicate the continental herd reduced by just under five percent last year. NPA chairman Stewart Houston says it is reasonable to assume the reduction has accelerated during the first quarter of this year. “A change of only a couple of percentage points in supply usually has a reasonable effect on price, so goodness knows where this will go,” he said.

Other factors that will contribute to a strong British price are the strength of the euro, which is currently making imports around 14 percent dearer, and a predicted fall in the national herd (based on sow cullings) of 40,000-50,000 sows in the first half of this year.

Desperate Danes

And the state of the pig industry in Denmark is critical. Despite producing a consistent product designed to meet the needs of the global pigmeat market, Danish producers are the poor men of Europe.

Producers usually get several pence a kilo more than the base price quoted by Danish Crown and they can expect a year-end bonus of 7-9p a kilo on every pig sold.

But annual bonuses and excellent productivity cannot repair the damage being wreaked on the industry by chronic low prices and many Danish producers would be better off quitting before the banks withdraw their support.

Danish Crown has said it cannot afford to pay its producers more because of the difficulties it faces on world markets where it has to compete against a weak United States dollar. Danish Crown is also expected to close a slaughterhouse and deboning plant this summer.

The cooperative is predicting a four to five percent fall in production during the next 12 months and this will have a major impact on pork availability in Britain, says NPA.

5m Editor