Pig producers attempt to cope in difficult market
The escalation of feed prices is hurting pig producers. While some attempt to improve their position, others are heading out of business.
With UK pig producers due to rally in central London in early March and the EU introducing measures to aid private storage of pigment in February, the industry does not have too much to smile about at the moment.
Director of the British Pig Executive, Mick Sloyan, has welcomed the EU’s support initiative, commenting that the industry is in dire straits across the whole of Europe and that the measures should help to stabilize prices.
A variety of factors have come together, from high feed prices to the impact of the German dioxin crisis, to put additional strains on the industry. However, the EU measures may not be enough on their own.
Mr Sloyan said: “Much depends on how much processors put into storage. Pig farmers are losing up to GBP21 on every pig they sell.
“There is still a great deal of work to do in getting the prices paid to producers up to a level which sees them at least break-even.”
The UK industry is doing a lot in an attempt to improve its situation. In addition to the central London rally and the handing of a petition to the country’s Prime Minister, a nationwide “banner blitz’, highlighting the quality of the country’s pork production has already started, and pressure is being placed on retailers.
However, this may not be enough. One of the largest pig producers in Ireland has announced his intention to quit the business, and it has been predicted that half the pig producers in the French region of Brittany could be forced to exit the industry mid-year. In the Czech Republic, pig numbers have fallen to 1946 levels, although rather than this decline being attributed to high feed costs or a lack of consumer confidence, the contraction has been attributed to competition from cheap imports.
But this is not simply a European problem. High feed prices are affecting the industry worldwide. As we discuss in our lead story, high input costs are eating into margins across continents.
While producers may have increased efficiency and been able to reduce costs on-site, nobody can escape volatility in the markets, and while markets can go down as well as up, a decrease does not look likely any time soon.
In early February, the Food and Agriculture Organization of the United Nations reported that food prices had surged to a new historic peak in January – for the seventh consecutive month – and that high prices would continue for the months to come.
While the FAO’s index shows an increase, this is not the case across all its reported indexes - its Meat Price Index remained steady. While meat prices remaining static when the overall index is rising may be bad enough, but again this is not the whole story. The FAO notes that there was a slight increase in export prices for meat from Brazil and the US, but that, in Europe, prices had declined due to a fall in consumer confidence following the dioxin feed contamination scandal.
Given that we operate in a market economy, one thing is for sure – input prices cannot keep rising forever, there is only so much the market can bear. The trick will be to be able ride out the difficulties to when markets improve. Food must come from somewhere.