House of Lords supports a rare breed
— British pig farmers

If supermarkets want to see the end of English pork production, they are going exactly the right way about it, food and farming minister Lord Rooker told the House of Lords. “We fully support the claims of the industry that it should get a fairer share of the price.”

He went on to highlight misleading labelling. “Labelling for food shows where the product underwent its last significant process as opposed to where the food was grown or reared. This is something we are dealing with through the European Union, and the Food Standards Agency is undertaking consultation on better labelling proposals.”

There was a need, he said, to get the message across to British consumers that extra costs on farmers are reflected in the price. “That has got to be genuine information. So it is no good when we have what happened a week ago in the other place. The Leader of the Opposition chided the Prime Minister over the increase in the price of milk, but for the past 18 months Tory MPs have been queuing up at my office and demanding that I get more money to our dairy farmers. Doing that has had an effect on the price of milk, and the same argument applies to the price of meat.”

THE FULL DEBATE

Lord Hoyle asked what steps government is taking to counter the difficulties facing the British pig industry following the steep rise in the costs of feedstock.

Lord Rooker: My Lords, we have supported the measures taken by the European Commission to increase feed grain supply to the European Union market in respect of the current high prices. Various factors have been used for that, such as zero set-aside and the selling of intervention stocks. We have frequently made the point that it is in the supermarkets' and processors' own long-term interests to establish fair and sustainable arrangements for dealing with their suppliers. However, ultimately, the market will set the price.

Lord Hoyle: My Lords, I thank my noble friend for that very helpful reply. From what he has said, I am sure he is aware that, while feedstock prices have gone up by 50 percent, the British pig producer is losing roughly £26 per finished pig. If that continues, there will not be a British industry to talk about. I noted that pork was on the luncheon menu in the Peers' Dining Room, which I hope came from a British source.  I should like to ask my noble friend for help in two ways. First, he mentioned the supermarkets. Will he join the campaign to get better prices for United Kingdom pig producers and ensure that it is passed down and does not get stuck in the supply chain to the farmers? Secondly, with the highest animal welfare standards in the world, will the Minister do something about the unfair competition from importers who have nothing near our animal welfare standards?

Lord Rooker: My Lords, on the first part of my noble friend's question, he is absolutely right. If the supermarkets want to see the end of English pork production, they are going exactly the right way about it. We fully support the claims of the industry that it should get a fairer share of the price, but we cannot interfere on that. It is true that we have the highest welfare standards in the world. Some other countries in Europe - Sweden, the Netherlands and Germany - certainly have high standards. However, the real issue is that World Trade Organisation rules do not allow welfare standards to be raised as part of the deals, which we are pressing in the European Union to get on to the World Trade Organisation agenda.

Lord Redesdale: My Lords, the Minister said that the Government can do nothing with the supermarkets because it is up to the market to bear the cost. However, as most of the pork sold comes through a very small number of supermarkets which have almost a monopoly on the sale of pork, is it not an issue that could be referred to the competition authorities? These supermarkets are keeping the price artificially low, which is affecting the industry. As the noble Lord, Lord Hoyle, pointed out, pork is on the menu in the Peers' Dining Room. It is from a rare breed, which will be the case for the whole of the British pig industry in the next three or four years.

Lord Rooker: My Lords, I regret that I have to hide behind the fact that the Competition Commission has an ongoing investigation, so it is inappropriate for me to comment. But the issues are very relevant.

Baroness Trumpington: My Lords, as the whole of the Danish economy is based on the sale of bacon, it seems to me, and as Denmark, too, has supermarkets, have we anything to learn from the Danes?

Lord Rooker: My Lords, we import an enormous amount of bacon, but about 55 percent of our consumption is home produced. On the totality of pork, ham and bacon, as much of that is consumed as lamb and beef in this country, so consumption is large. But the Danes have also suffered from the high feed prices-they represent 60 percent of production costs. As my noble friend Lord Hoyle said, everyone knows that they have gone up far more in the past year. These prices will work their way through to everyone.

Lord Soulsby of Swaffham Prior: My Lords, does the Minister agree that this is a problem not only for the pig industry, but also for the dairy and beef industry? It is in part due to the trend to move away from growing wheat and soya for animal feed to growing these crops for biofuels-especially in South American countries, such as Brazil - which is much more profitable. Have the Government any suggestions for what should be done about this in order to safeguard European Union producers?

Lord Rooker: My Lords, the growing of biofuels in the United Kingdom and the European Union is so tiny that it is not the cause of the high grain prices. We have had two poor summers which led to bad harvests, while the problems in Australia and the growth in consumption across Asia and China have been major factors. However, the noble Lord has raised another issue. We must make sure that biofuels do not replace food crops, which would result in the price of food going up.

Lord Brookman: My Lords, I share in the concerns about the pig industry, but what about me and other noble Lords who have been told not to eat our sausages in the morning?

Lord Rooker: My Lords, I am told that you are quite safe if you eat a basically healthy and balanced diet.

Lord Taylor of Holbeach: My Lords, does the Minister agree that it would help if consumers were encouraged to buy more British pig meat? The key to this is informing the consumer of the country of origin by ensuring that food labels demonstrate clearly that the products, processed or not, are made from British pigs, while meat from overseas sources and processed here cannot be labelled as British. When are the Government going to do something about country of origin labelling to this end?

Lord Rooker: My Lords, the fact is that the current position is very unsatisfactory. Labelling for food shows where the product underwent its last significant process as opposed to where the food was grown or reared. This is something we are dealing with through the European Union, and the Food Standards Agency is undertaking consultation on better labelling proposals. But what underlies the noble Lord's question is the need to get the message across to British consumers. We need to make it clear that extra costs on farmers are reflected in the price. That has got to be genuine information. So it is no good when we have what happened a week ago in the other place. The Leader of the Opposition chided the Prime Minister over the increase in the price of milk, but for the past 18 months Tory MPs have been queuing up at my office and demanding that I get more money to our dairy farmers. Doing that has had an effect on the price of milk, and the same argument applies to the price of meat.

Lord Livsey of Talgarth: My Lords, will the Minister consider the fact that, before the hike in grain feed prices, which has seen them double, the variable costs in the production of pig meat were working out at 80 percent for feed? Is it not time that a ban was put in place on supermarkets selling product at less than the cost of production?

Lord Rooker: My Lords, it is a very unsatisfactory situation, but, as I have said, at the end of the day the market will decide. The Competition Commission is looking at these issues, and the Government have given as much support as they can to the industry in trying to get a fair deal. As I made clear in an earlier response, if the supermarkets want to see the end of English pork production, at the moment they are going the right way about it.

I support you, says Asda chief

The pig industry’s campaign for better prices to offset high feed costs has made significant strides since the London Rally last month.

• Secretary of state Hilary Benn has voiced his express support for the campaign.

• The pig price is continuing to rise, in Britain and on the continent.

• As a result of almost daily briefings by NPA, leading supermarkets are now making serious behind-the-scenes efforts to ensure increased prices are fed down to producers. In an important move forward yesterday, Asda chief Andy Bond singled out pig producers for special mention. In response to a dialogue between the company and producer Richard Longthorp, he said:

“I understand that some of my recent comments regarding cost prices about our suppliers have caused concern amongst primary producers - the pig sector for instance.

“We at Asda fully understand and appreciate the problems being faced by the pig sector with the increase in pig feed costs. I would like to reassure them that my comments were certainly not aimed at them. We will continue to do all we can to support United Kingdom pig producers.

“And, while we do not purchase from pig producers directly, I have made it quite clear to all our processor suppliers that I expect to see a significant part of the previously agreed increased cost price which we pay to our processors passed back up the supply chain to the farm level.”

Andy Bond’s last sentence is particularly important. During the campaign so far, increases paid by retailers have not as a rule been passed on in full to their intended recipients, producers.

But with a network of producers keeping him informed of price developments, NPA chairman Stewart Houston is now able to have an on-going dialogue with retailers on this issue.Nobody from BPISG was available for comment this morning, but it is expected that BPISG's planned rally outside Asda House in Leeds will now be put on hold.Crucially for British producers, the supply of pigs from the continent is continuing to shrink.

Census results for December indicate the continental herd reduced by just under five percent last year. Is this enough to ensure £140p a kilo in Britain for as long as feed prices stay at their current levels?

NPA chairman Stewart Houston says it is reasonable to assume the reduction has accelerated during the first quarter of this year.

“A change of only a couple of percentage points in supply usually has a reasonable effect on price, so goodness knows where this will go.”

Other factors that will contribute to a strong British price are the strength of the euro, which is currently making imports around 14 percent dearer, and a predicted fall in the national herd (based on sow cullings) of 40,000-50,000 sows in the first half of this year.

As reported on this page at the weekend, the state of the pig industry in Denmark is critical. Despite producing a consistent product designed to meet the needs of the global pigmeat market, Danish producers are the poor men of Europe.

Producers usually get several pence a kilo more than the base price quoted by Danish Crown and they can expect a year-end bonus of 7-9p a kilo on every pig sold.

But annual bonuses and excellent productivity cannot repair the damage being wreaked on the industry by chronic low prices and many Danish producers would be better off quitting before the banks withdraw their support.

Danish Crown has said it cannot afford to pay its producers more because of the difficulties it faces on world markets where it has to compete against a weak United States dollar.

As predicted here last week, Danish Crown is to close a slaughterhouse and deboning unit this summer, and there may be a further closure before the end of the year.

The cooperative (which accounts for 90 percent of the Denmark’s pig slaughterings) sees slaughter in Denmark falling 4-5 percent over the next 12 months. This will have a major impact on pork availability in Britain.

A number of Danish producers now send their pigs to Germany for slaughter, where they get a better price, and this has contributed to the shortfall through Danish Crown slaughterhouses.

Slaughter weights are falling across Europe, according to price analyst ZMP, as producers send their pigs to slaughter earlier, in a bid to reduce feed costs.

Fully paid up NFU members will be able to claim savings on a range of Land Rover vehicles including the Land Rover Defender, Freelander 2 and Discovery. The deal will also allow members to offset the increase in Vehicle Excise Duty when the new bands come into force in March 2009 for all vehicles with CO2 emissions over 225g/km.

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