More than 220 delegates from 13 countries attended the recent EPP annual congress at the city of Norwich, located in one of the two most highly populated regions for pigs in the country. Following a welcome and thanks to Congress organiser Ian Campbell, from UK Branch Chairman Jim Dewhirst, the Congress was opened by EPP President Per Bach Laursen from Denmark. He commented, "The industry has experienced the worst conditions for 30 years, with high feed costs, low producer prices and heavy sow culling further impacting negatively on slaughter pig prices."

The Retailer's Role

* "The industry has experienced the worst conditions for 30 years"

Per Bach Laursen

As Senior Buyer for pig meat at the UK's largest supermarket chain Tesco, Andy Carter explained how all the company's activities revolve around the core purpose 'To create value for customers to earn their lifetime loyalty' under the three principles of 'Better-Simpler-Cheaper'. Sales growth for the whole organisation has increased 41 per cent over the last five years (including rising contributions from non-food and international sales). Although Tesco dominates the UK market with a 31.5 per cent share of the total retail market, its global position is well below leader, Wal-Mart, which owns Tesco's nearest UK rival, ASDA. For most markets, Tesco offers Value, Standard and Premium lines. The latter is not necessarily of minor importance: Tesco's Premium lines, for example, account for 40 per cent of total sausage sales. Working with market analyst organisation, Dunnhumby and data on the chain's own Clubcard loyalty card, Tesco has amassed a vast amount of data on their shoppers and their purchases, which the company uses to improve its offering.

Regarding the producing environment, Mr Carter highlighted increasing costs of production (feed and fuel); 16 per cent change in exchange rates over the current year; rising meat prices (beef, 24 per cent; lamb, 90 per cent; chicken, 9 per cent; pork 15 per cent); growing interest in local regional production; consumer fears about production methods; significant media coverage that raised consumer concerns about production methods; greater role of sustainability; focus on carcass balance, i.e. aiming to use as much of the carcass as possible and a growing awareness among consumers of food miles. The market does offer new opportunities: to differentiate the premium tier; to retain point-of-sale differences with other proteins; to create closer links to producers and processors especially when meat supplies are tight; to inform customers about product attributes; for fixed-weight packs for customers on a budget; and to reduce inefficiencies in the supply chain.

Mr Carter concluded, "Consumers should be at the centre of our thoughts."

The Processors: Tulip

Two presentations were made to the Congress representing the processor's view. The first was made by Andrew Saunders, Division Director of Tulip. He opened by saying that Tulip is the UK equivalent to Danish Crown. It has a turnover of 31.2 billion on a sales volume of 395,000 tonnes, and 9,000 employees. The group includes BQP, Hygrade, Roach Foods, George Adams and Dalehead Foods.

Trade is with all the main retailers - under different arrangements - but the relationship with high-end supermarket chain Waitrose is particularly close. Part of the John Lewis Partnership, Waitrose has a four per cent share of the retail food market but this has grown by 72 per cent over the last six years. All John Lewis organisations are unusual in that they are owned by the employees. Waitrose's mission is to be the best quality and most innovative food and wine retailer. Above all, they require high quality but innovations, being first to market, sharing volume and efficiency gains and input on ranging and tiering.

Dalehead Foods is Waitrose's leading supplier for meat, offering 250 products from 250 suppliers, and slaughtering 550,000 pigs annually. Dalehead supplies all Waitrose's pork and bacon, 90 of cooked meats and 70 per cent of its sausages.

Regarding production systems, farrowing crates have not been employed for more than five years. In a television advertising campaign last year, straw bedding was chosen as the key feature to highlight the high welfare standards for Waitrose pigs.

Continuous research and development has been critical to maintain a stream of innovative products. The business started with multiple sites in the 1980s but now operates on just two sites.

The company works closely with PIC, and the partnership has resulted in a series of genetic lines specially developed for the evolving production system as well as improved eating quality, including the 'Waitrose boar'. the 'Berkshire boar' and traditional breed, the Gloucester Old Spot.

Organic is a growing sector of the business. At 32.80 per kg, production costs are double those of standard systems but the market is growing fast and Waitrose uses half of all organic pig meat produced in the UK. The latest development is wild boar - very much a niche market so far.

Product quality takes much attention, and there is constant independent testing at the Danish Meat Research Institute. Among recent innovations is the 'Easy-to-Cook' chilled range re-launched at the end of 2007, which includes several pork dishes to cook at home with meat, sauces and other ingredients provided in a single pack.

Mr Saunders closed by emphasising the importance of communication between all levels in the company. Waitrose made a film to show its employees how its pigs are produced, and groups of key managers have visited the farms.

All the hard work and innovations are paying off: Waitrose pork sales are rising at 7-8 per cent a year.

The Processor's View: Tönnies Fleisch

Dr Joachim Timmermann presented a different processor's view: Tönnies Fleisch in Germany. The company has 6,400 employees and a turnover in 2007 of €3 billion. It slaughters ten million pigs per year and 35 per cent of tonnage is exported. It is a leading supplier of retail pre-packed meat.

Tönnies has three plants in Germany. Its headquarters and a plant slaughtering half of the pigs in Rheda-Wiedenbrück, North Rhine-Westphalia where pigs and sows are slaughtered, as well as deboning of pigs, sows and beef carcasses and production of retail pre-packing and convenience products. The plant at Weissenfels near Leipzig slaughters and debones pigs and also produces retail packs. Lastly slaughtering and deboning of high-welfare pigs are carried out at Sögel in the densely populated pig region near to the Dutch border. There is a further plant in Brörup in south Jutland, Denmark.

In total, the business covers 18,000 farms. Production/quality programmes cover feeding, health and medication, housing and welfare, hygiene, husbandry and biosecurity. Administration covers the preparation of documentation, co-ordination and consulting, feedback on health and salmonella data; and objective, independent consulting. Animal welfare practices cover the whole chain from transport, arrival and unloading of animals, treatment of sick and injured pigs, lairage, animal handling, stunning and slaughter as well as welfare officers, training and traceability. Among the welfare regulations covering production are Weidemark welfare programme, basic German standards QS and IKB; welfare checks by Hijdeporc, independent audits, special conditions covering Weidemark suppliers and farms and finally, special welfare requirements for product destined for the UK.

Dr Timmermann concluded with the factors he feels are important to the Tönnies Fleisch, "Partnership with suppliers and farmers, highest quality standards, innovative techniques, total quality management and consequences of animal welfare are the essentials for food safety and quality requirements of our customers."

The Government's Role

Jonathon Shaw, Minister for Marine, Landscape and Rural Affairs, explained that it had been a difficult year for the industry, not least because consumers are becoming more aware of farming practices and more selective in their purchasing.

Governments can help, the Minister said, regarding the establishment of level playing field for the local industry. Another important issue regards the import of genetically modified (GM) food, he said, and the UK government fully supports the European Commission to get faster approval for GM crops. It is awaiting the Commission's reaction on meat and bone meal (MBM). Feed is on the top of the agenda, and the government is also working hard to smooth trade with China following the foot and mouth disease outbreak in the UK last year.

Opinions from a Producer

Stewart Houston, Chairman of the National Pig Association (NPA) and BPEX completed the formal Congress session representing the producers. Until recently, he ran the family business with 330 sows and progeny to finish. He has now stepped down in favour of his son and the business is moving to East Anglia.

* "The biggest issue is a lack of trust between partners in the supply chain"

Stewart Houston

"The customer is always right - and they are very big customers in the UK, " he said.

The UK industry is focussed on the home market but he asked if it should start looking to export to add value.

The supply chain is not working effectively: recent rises in retail prices are taking too long to get back to producers.

The biggest issue, Mr Houston suggested, is a lack of trust between the partners in the supply chain. Retailers are in fierce competition for volume and the producers are too fragmented. There are no co-operatives in the UK but it would help producers to come together in marketing groups. The present situation leads to a lack of investment by both producers and processors.

He also stated, "It would be better to pay on the basis of lean meat than a lack of backfat."

In conclusion, Mr Houston said that there is a need to develop confidence to invest through whole-chain agreements. There is good reason for optimism in that some retailers, like Waitrose, are beginning to think differently and engage more with suppliers.

Next meetings

The Austrian branch will host EPP Congress 2009 in the attractive town of Graz on 4-6 June. In 2010, EPP will return to the Netherlands.

Other presentations at the EPP Congress 2008 will appear as articles on ThePigSite.