“This is only the start”, says NPA on pig industry crisis
Chief executive of the National Pig Association (NPA) Dr Zoe Davies has warned that there is “still a long way to go” in resolving the multitude of issues disrupting production in the UK pig sector today.
The NPA said it is continuing to “push at all levels”, including regular contact with Farming Minister Victoria Prentis, to get pig prices up to a level that ensures a future for pig production in the UK.
Davies said: “We are encouraged by the recent price increases that are giving producers hope. But our message to everybody – Ministers, processors, retailers and other buyers of pork – is that there is still a very long way to go. This is only the start.”
“Many pig producers remain in absolute dire straits financially – and unless these price increases are sustained, we will lose them, and, with that, our capacity to produce and supply the pork products our consumers demand.”
February’s roundtable
Davies described February’s pig industry roundtable, which was organised by Defra at the request of the NPA and National Farmers’ Union, as a “game changer”. It brought all parts of the supply chain together to discuss the realities of the pig backlog and the wider issues affecting producers, including soaring costs of production.
While the industry wasn’t able to gain immediate solutions on the day, Davies praised the summit for improving communications across the supply chain. She added that Victoria Prentis MP, who chaired the meeting, has since taken an active role in raising concerns and holding individual businesses to account.
Davies said: “As a result, we have seen movement on the backlog, and there is now a far greater understanding of how the supply chain works alongside an awareness among processors and retailers of the huge financial challenges producers face, and their battle for survival.
“This has given us a basis to make the case for getting more money into the system and through to producers as quickly as possible. We are just starting to see the fruits of that.”
Follow-up meetings
The NPA has reported numerous follow-up meeting since the February summit. These consist of meetings between Prentis and industry representatives, and the Minister and processors.
Davies said that at all these meeting the message has been the same – taking action now to ensure producers receive sufficient income to pay for their feed, to stave off the bank, stay in business and, after enduring massive losses for more than a year, finally get back to break-even point.
She said: “Victoria Prentis has been very helpful. We have never had such good access to a Minister – we meet and talk regularly. She is taking on board what we say and fully understands the severity of the situation. In turn, she is seeking action from others in the supply chain.
“We have seen some good support from processors that have shown they understand the urgency. Some retailers have been helpful, too, and, behind the scenes, have been doing what they can.”
Davies added that the industry “desperately needs to see more urgency from some [retailers], including the UK’s biggest retailer and others that have the necessary resources to make a difference.”
She added: “They hold our future in their hands, and what they all need to understand is, with EU pigs in short supply and prices going through the roof, there will be nowhere else to go if we lose a big chunk of our production base.”
The current situation
NPA reported that pig producers have endured more than a year of negative margins, including typically losing around £25/pig in the first half of 2021, increasing to an unprecedented £39/pig in the final quarter.
Net margins will have worsened significantly during the current quarter, leaving many producers facing a battle for survival.
Russia’s invasion of Ukraine prompted a dramatic spike in the wheat price from around £215/tonne to in the region of £300/tonne. Soya prices are also high, while other input costs, including energy, fuel and labour continue to rise.
NPA claim that there have been some notable processor contribution price increases over the past few weeks, with more on Friday and Morrisons-Woodheads leading the way.
However, while contracts vary significantly, many producer pig price contracts remain heavily linked to the SPP. While it has shown healthy increases over the past fortnight, including a record 5.3p last week, it still stands at just under 147p/kg. NPA said that the SPP’s nature as a price average index renders it unable to respond as quickly to the market as most within the industry would like.
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