UK Pig Industry Getting More Optimistic

23 March 2012, at 3:38pm

ANALYSIS - The UK pig sector is more optimistic about its financial future than it was last year, although producers are less hopeful about the future than the processing and retailing side, writes Chris Harris.

According to the British Pig Executive Pig Meat Industry Survey for 2012 a third of the processors and retailers who responded to the survey were more optimistic about the future compared to last year.

Half said they felt about the same as last year.

However, just 17 per cent of the pig producers in the UK said they were more optimistic than last year with 67 per cent saying they felt about the same.

Despite this rise in optimism the report, which has been prepared by Promar International, shows that the confidence in the industry still falls far short of what it was in 2009 and 2010, when it hit new heights after the economic slump of 2008.

Last year also, the pig meat sector was feeling the effects of the global economic downturn and confidence and investment had plunged back to virtually where it was in 2008.

Source - Promar International

Source - Promar International

While the producers declared themselves less optimistic about the future, 23 per cent of them said they would be investing more in new buildings in the coming year while 42 per cent said they would be investing about the same amount.

For the processing sector, 40 per cent said they would be investing more, but a similar number said they would be investing less.

The main reason for the increased investment was to replace some of their capital assets and also to improve efficiency and productivity.

However, some of the respondents to the survey said they would be investing for tax reasons and also because of general maintenance.

In general, though, the survey rates the enthusiasm among pig producers, processors, retailers, vets and others in the sector as negative when it comes to investment in both buildings and equipment.

Although those in the sector are keener on investing in equipment and machinery now compared to last year, the major drive for investment is among retailers and vets. The producers have the lowest optimism when it comes to investing in new equipment.

The main reasons why people in the pig sector are not going to be investing more are because they felt they would not get an adequate return for their money, because of uncertainties over demand and a lack of finance.

However, despite the reports in the general media that small and medium sized enterprises are having difficulties in securing loans and fiancé from banks, this was the least concern to pig producers.

A lack of confidence in the long-term future of the sector was a significant reason for not investing.

While the producers and processors might not be enthusiastic about investing, 90 per cent of them said they were between 71 and 90 per cent capacity when it came to production, with 28 per cent of them running units at between 81 and 90 per cent and 14 per cent running them at between 71 and 80 per cent.

The pig sector feels confident that it is competitive within the UK, but more in the sector feel they are less competitive than operations in the EU, although they feel their competitiveness compared to non-EU operations is improving.

The sector has a positive outlook for the present year with regard to its competitiveness in the UK and it believes that it can be more competitive in the EU. It is less certain about how it will compete against non-EU countries this year although the sector as a whole shows more optimism than last year. The retail and foodservice arms of the pig sector are particularly positive about their competitiveness.

The limitations the UK pig industry expects to see this year are mainly through the capacity it has in plant and buildings although order sales are seen as a potential stumbling block.

Everyone in the sector is confident that prices have increased and will keep on increasing and the confidence in prices this year is a complete turn-around from last year.

Further Reading

- You can view our feature article on this report by clicking here.