Self-set Weekly Price System Stuck in the Mire

UK - Like Oliver Twist, the processors will soon have to ask the retailers for more if the already fragile health of the United Kingdom pig industry is to be maintained and hopefully improved, write Peter Crichton.
calendar icon 18 April 2011
clock icon 3 minute read

The upcoming Easter Bank Holiday has cut slaughter throughputs with the result that none of the major players actually needed to go and look for extra pigs at a time when supplies remain tight, but once all the Bank Holidays are behind us and normal working returns, demand is expected to improve, especially when the nation's barbecues get fired up.

Although the DAPP has continued to rise and put on another 1.37p to stand at 139.04p this week, market sentiment was not helped by the hardline stance some of the larger retailers are taking (we know who they are) by effectively refusing to share the very sharp rise in feed costs that are decimating the profit and loss accounts of pig producers.

Lamb and beef farmers have the advantage of being able to quote soaring live auction and other market prices and seem to have been successful in receiving a viable return for their livestock, whereas pig producers seem to be classified as "loss leaders" using a self-set weekly price system which seems to be stuck in the mire.

Evidence of this was provided by Tulip going out with their squeak price unaltered at 141p and only Vion breaking the mould to increase by 1p to the same price. So we now have Woodhead still leading the field at 144p and a dead heat for second place between the other three.

The relative strength of the euro which closed the week worth 88.22p exactly where it started has helped to maintain cull sow values at similar levels where producers with large loads were able to negotiate prices of 108p–110p/kg from the two major players.

Weaner prices have continued to stage their modest recovery with the latest Agriculture and Horticulture Development Board 30kg ex-farm average rising to 343.24/head, but still well adrift of cost of production levels.

On the feed front the shortage of rainfall in many of the main British wheat growing areas will hit cereal yields and there is certainly no reason for the verse of the hymn about "soft refreshing rain" to be omitted at church this Sunday.

Although earlier in the week ex-farm feed wheat quotes were nudging towards 3210/tonne they have drifted back a shade, but are still completely out of step with pig prices.

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