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June 2
Racing times
How does she do it? Mery Ward's pig racing on Open Farm Sunday has made The Times.
June 1
That sinking feeling...
It's not only the pig industry that is experiencing a sinking feeling. Thanks Ray Cuddy for this weekend smile.
European Council to discuss food prices
On May 20, the European Commission adopted a Communication setting out policy responses to mitigate rising global food prices. The document will be discussed at the European Council this month (on June 19-20).
The communication analyses structural and cyclical factors and proposes a three-pronged policy response, including:
1. Common Agricultural Policy measures through the Healthcheck.
2. Monitoring retailers.
3. A biofuels policy that doesn't have damaging side effects.
HAM ALERT
Pork exports up, and imports down...
but ham imports soar over 50pc
The high sow cull in the United Kingdom contributed to a 47pc rise in chilled carcase exports to Germany in the first quarter of this year. Generally United Kingdom pork exports in the first quarter were up 22pc, to 31,000 tonnes.
At the same time, the strength of the euro against sterling has contributed to a contraction in imports of pork from other European Union countries - down 9,000 tonnes compared with the same period a year ago to 109,500 tonnes. Imports from Denmark are down 3pc, year on year.
However, imports of processed hams remain a problem - up 51pc compared with last year, largely driven by imports from Poland.
Barbies stiffen prices
The barbecue season has started on the continent, helping fuel a rising all-Europe average pig price. The average European Union reference price has risen seven percent to 124p over the past three weeks. Last year at this time continental prices were more stable. The rises, which have been evident since February, have been most apparent in Germany, Holland and Poland. The German reference price is now 20pc higher than a year ago. The Polish price is 45pc higher (but this is partly due to the strength of the euro). The strong euro also means that the United Kingdom reference price, whilst being 14pc higher than a year ago in sterling terms, is 3pc lower when expressed in euros.
United States pig prices will rise sharply next year
Retail prices for pork remain low in the United States, as its pig industry is a little further back in the supply-demand cycle than Europe. But pig farmers are losing as much as £16.50 a pig at present and an increasing number will thin or liquidate their herds, according to Chris Hurt, agricultural economist for Purdue University. "What's going on today really affects the price a year from now. Pork prices that we pay at the store are going to go up sharply." Sow slaughter is currently up seven percent compared to this time last year.
Top ten producers
| Top ten pork producers last year | Pig slaughtered (m) | ||
| 1 | Smithfield Foods USA/Poland | 30 | |
| 2 | Danish Crown Denmark/UK/Poland | 22 | |
| 3 | Vion Food Netherlands/Germany | 19 | |
| 4 | Tyson Foods USA | 17 | |
| 5 | Cargill USA/Brazil | 10.4 | |
| 6 | Friboi USA | 10 | |
| 7 | Tönnies Germany | 10 | |
| 8 | Olymel Canada | 8 | |
| 9 | Maple Leaf Canada | 7 | |
| 10 | Hormel Foods Corp USA | 6 | |
What happens when there's cash on the table?
When the pig price in Britain and on the continent reaches levels that earn significant profits for producers, there will be "cash on the table", as economists describe it, for those who are in a position to enter pig production quickly and who are not burdened by debt from the current cost-price crisis in the industry.
So those producers who are currently deciding whether to cut their losses, or hang on until the really good prices arrive, must take a view on whether higher prices, when they come, will continue long enough for them to recoup their losses, or whether cash on the table will make the better prices short-lived.
In other words, how many farmers will spot cash on the table? (All of them). And who will be in a position to take a slice of it? (Perhaps not that many).
Outdoor production could expand quickly in Britain but only if enough land-owners are prepared to rent land for pigs instead of growing more cereals, and if sufficient farmers can be found to finish the pigs.
Producers who have quit pigs but still have the buildings could go back into production but if they are still burdened with debt from when their unit was previously in production, they are unlikely to be enticed by cash on the table unless they see some longer-term guarantees.
To this mix of probables, possibles and unlikelys we can add another class of producer, as identified by NPA and BPEX chairman Stewart Houston this morning: the producer who continues in pigs until the better prices arrive, and then devotes the next few years to make an orderly withdrawal from the industry unless he sees some form of guarantee of sustainable prices going forward.
Producers will have their own definition of when there is cash on the table, and when it will occur, but if we assume that there is cash on the table when the pig price hits 160p and that this will happen next spring, it will be a year before opportunists are able to start taking the cash, and thus start bringing prices down.
But if we consider the limitations outlined above, it is clear there may not be as many opportunists who are able to take advantage of cash on the table as there would have been say a decade ago.
Add to this mix the strength of the euro versus sterling, which makes imports more expensive, and the increasing value of slurry as a by-product of pig production, and it is possible to see high prices that form a gentle, profitable curve, rather than a short-lived spike. But what do you think? — D.S.
Processors point the finger at retailers
The chart below shows retailer v producer price movements, against an index of 100 set on July 2 last year. When the two lines merge producers' share of the price will have been restored to pre-crisis levels. Until then, industry continues to pose the question: Who is profiteering at pig producers' expense?
The BPEX-NPA Pigs Arte Worth It campaign group is clear that neither retailers nor processors are passing on sufficient of the increases they have received from consumers.
For their part, processors insist it is the retailers who are profiteering. But until a processor is prepared to go public on the situation (most unlikely), the campaigns group will press for a supply chain audit undertaken by the Office of Fair Trading.
Meanwhile the group it calls on retailers to recognise that significant increases in the retail price of pork and pork products means they are now in a position to reduce their percentage margin, without reducing profit.
Danes fret over lack of bacon promotion
A lesson to British producers about how retailer promotions must be carefully targeted or they will suck in imports: Denmark expects the United Kingdom bacon market to suffer in the weeks ahead — because supermarkets are not running any campaigns on bacon, due to price increases.
Danish Crown loses more pigs to German abattoirs
Danish Crown is losing the equivalent of a fair-sized abattoir's worth of pigs as producers take advantage of higher prices being offered by German abattoirs. The Danish co-operative killed less than 300,000 pigs last week — 30,000 less than it had budgeted for. It is increasing the price it offers producers but still lags behind the German abattoirs. Danish Crown is said to be pondering when the European pig industry recession will end and is expected to make an announcement on the subject soon.
Loss-making Danish producers urged to fill their pig houses
A recent analysis shows Danish weaner producers' income fell from +£68,500 in 2006 to -£84,600 last year, whilst finishers just managed to break even, their higher feed costs being offset by cheaper weaners. However, some British producers might consider the Danish pig industry remains in denial: according to Lindhart Nielsen, president of Danish Pig Production, the "negative development" will soon end. He is urging producers to fill up their pig houses now to reap the benefits of better prices.
Effect of Russian ban will be drastic
Russia has banned pigmeat imports from a number of European abattoirs on health grounds, including two in Denmark. If the ban is not lifted quickly the affect on Danish exports to Russia will be "drastic".
No shortage in Spain yet
Contraction of the Spanish pig herd has yet to show through in production. Pork production was up 11pc at the beginning of this year, as the number of slaughtered pigs increased 8pc.
Russian consumers face pork shortages
If Russia persists in its ban on frozen pigmeat from many European Union abattoirs, on health grounds, its consumers will see dramatic price hikes and perhaps even shortages of pork and pork products. Nearly all pigmeat imported into Russia is frozen as its bureaucratic customs clearance and its geographical isolation make the imp[ort of chilled meat impracticable.
May 31
Continental pig producers cannot defy gravity after all
Representatives of the major pig producing countries now admit they cannot weather the high feed cost crisis and their national herds will shrink far more than they originally predicted.
As a result, the all-Europe average pig price will continue to rise through the autumn and into next year, as buyers compete for dwindling supplies.
The Danes were shocked when their April census showed their herd had dropped over 10pc and other countries are now discovering the banks cannot support loss-making pig units indefinitely.
The Polish breeding herd fell 11pc last year and will see a similar fall this year. Producers on the Tesco contract are said to be questioning whether the small premium they get is worth the extra welfare cost.
The two other big producers in the Eastern bloc, Hungary and the Czech Republic, have also seen big falls in recent months, of 10pc and 13pc respectively.
When feed prices rocketed last autumn, pig industry representatives in France, Germany, Denmark and Spain claimed their herds would escape almost unscathed.
But these forecasts have now been discredited. Following the 10pc fall in the Danish herd, it is forecast the French pig herd will see a 5pc drop, the German herd will fall 1.5pc, and the Spanish herd will decline 4pc.
Only a few weeks ago Germany and France were predicting stable production this year, and Spain believed its herd would actually grow.
In the light of previous forecasts, the latest predictions are probably still an understatement of what is really happening on pig units.
Around 15pc of Spain’s 70,000 pig producers have now quit production, according to Anprogapor, the Spanish pig industry association.
Dutch economists continue to believe the Dutch pig herd will not drop, because Dutch producers have access to novel feedstuffs.
Germany’s weaner producers are expected to continue to lose money. The Germans expect pigmeat price increases to level out at around 140p a kilo because the market won't stand much more.
The United Kingdom forecast for this year remains the same at a 10pc drop (circa 40,000 sows).
“Our view remains that the continental pig herd is going to see a far bigger decline than has previously been predicted by most of the individual countries,” said NPA and BPEX chairman Stewart Houston today.
“There will be a bigger reduction in pigmeat supplies than the economists currently predict and the impact on price will be significant. One of our roles now must be to manage consumers’ price expectations by explaining that pork is still the best-value meat.”
A problem for British producers through autumn and spring is that as they move into profit as a result of higher retail prices, consumers will forget there are 12 months of losses to recoup.
Over the next few weeks Stewart Houston will be talking to retailers to urge them to protect their British pigmeat supply chains.
“If retailers had spent less time building supply chains from the continent and had concentrated on securing home supplies, they would be in a far more comfortable position now,” he said.
BPEX member Richard Longthorp predicts a tougher stance by banks on the continent as pig producers start falling into the sub-prime category.
The Euro 2008 football competition in June may see strong increases in producer prices in Austria/Switzerland. The last four major sporting competitions in Europe have been accompanied by price increases in the host countries compared with the European average.
Report predicts 20pc rise in pork prices, 2008-2017
Soaring world food prices will fall in the coming years but stay "substantially above" average levels from the past decade, a report said today. The world's poorest nations are most vulnerable - particularly the urban poor in food-importing countries - and will require increased aid to stave off hunger, a joint survey by the Organisation for Economic Co-operation and Development and the United Nations Food and Agriculture Organisation said.
High oil prices, changing diets, urbanisation, expanding populations, flawed trade policies, extreme weather, growth in biofuel production and speculation have sent food prices rocketing, trigging protests from Africa to Asia and raising fears that millions more will suffer malnutrition. "There is a real need to foster growth and development in poor countries and to assist in developing their agricultural supply base," the report said.
The report is based on a forecast of the cereals, oilseeds, sugar, meats, milk and dairy products markets for 2008 to 2017. It reflects agriculture and trade policies in place in early 2008 and includes an assessment of the biofuels markets for bioethanol and biodiesel.
Compared with the previous decade, the report said average prices over 2008-2017 for beef and pork should rise 20pc; sugar around 30pc; wheat, maize and skim milk powder 40-60pc; butter and oilseeds more than 60pc; and vegetable oils over 80pc. Internationally, overall food prices have risen 83% in three years, according to the World Bank.
Sow cullings
If they looked only at United Kingdom clean pig slaughter figures this year, retailers and processors might be excused for thinking producers have been crying wolf. At 699,500 in March and 891,700 in April they were up 2.2pc. But the sow and boar slaughter figures show the black hole that is opening up — they’re up 32.4pc.
Changes in clean pig availability will be seen going forward. Around 150,500 clean pigs are estimated to have been slaughtered in the week ending May 24 in Great Britain — 4pc less than in the same week last year.
Discounters grab a bigger share in Germany
Supermarket discounters in Germany increased their market share of fresh meat to 22pc last year, and cooked meat/sausage to 44pc. Pork imports from other European Union countries grew 5.8pc whilst exports of meat and meat products increased 21.8pc on 2006.
Tabletop classical swine fever
Defra will stage a tabletop classical swine fever outbreak on Monday at the Department for Business Enterprise and Regulatory Reform's conference centre in London. The exercise will involve suspicion through to confirmation of an infected premises in England, further spread of the disease in England, Scotland and Wales up to day eight, and later stages of the disease through to exit and regaining country freedom.
Weaner supplies tighten
Weaner prices are firming in Britain as a result of reduced availability. The average 30kg price rose by more than a £1 a head this week to £37.15. Prices were last this high in 2003.
When to vaccinate against PCV2
Hot topic for the night was PCV2 when around 20 pig producers gathered at Boroughbridge in Yorkshire for an evening workshop organised by BPEX knowledge transfer manager Lis Ravn. Many of those present were already using a vaccine or had taken up the offer to use it through the industry’s voucher scheme. Some producers thought weaning was the best time to vaccinate, when the piglets were going to be disturbed anyway. Others considered it less stressful to vaccinate when the piglets were still with the sow. Another topic for debate was using the right disinfectants to eradicate salmonella. Only certain components will treat it effectively. Lis Ravn reported trial results which showed the most effective disinfectants - in particular against salmonella - contained peracetic acid and hydrogen peroxide or quaternary ammonium plus hydrogen peroxide.
Pig farmers on strike
Italian pig farmers are to plan a national protest in Rome in a bid to get government to help them through the current cost-price crisis. This weekend some producers are on strike — refusing to ratify Protected Designation of Origin Certificates, which could cause a shortage of prosciutto in the shops. A strike spokesman said falling prices and higher costs had provoked ''the greatest unrest in the history of the sector''.
May 30
140p for cutters today
"Don't ring us, we'll ring you." And they did. Buyers were on the lookout for pigs during the middle of the week, but shrewd sellers who held their nerve were able to negotiate further price increases by Friday. There is no doubt that a serious decline in pig availability is now starting to hit the market. Despite the gloomy weather and indifferent retail demand, most spot sellers were able to haggle prices in the 132p–134p range according to specification, with cutters worth 4p–6p above this is in some regions. Traffic Lights commentary.
PIG INDUSTRY FEED SURVEY
Pig prices still too low: half of the
nation's pig
farmers planning to quit
Pig farmers will not lock into further losses. The price for pigs must increase to 150p a kilo, or more, before the majority will consider entering into new feed contracts.
This is the unequivocal message from the industry's on-line feed survey, which took place Thursday May 22 to Wednesday May 28.
The survey responses represent five percent of the England and Scotland pig herd.
Over 60 percent of professional pig farmers are considering quitting the industry. Fifty-three percent specifically say they will quit pigs when their current feed contracts run out, if feed prices and the pig price remain at current levels.
Most feed contracts start expiring from this June onwards. The average wheat price at which producers would take cover is £124 a tonne, with the majority of respondents in the survey stating £120-£130 a tonne.
Feed prices currently being paid by pig-keepers cover a wide range, with breeder diets averaging £176, rearer diets averaging £225 and finisher diets averaging £197.
SURVEY COMMENTS
• Being heavily invested it is incredibly difficult to leave the industry. Pig buildings are pretty useless for anything else.
• If we can continue to source alternative sow feeds ie. potatoes we will continue, possibly selling weaners, but finished pig prices must continue to climb if we are to carry on selling finished pigs.
• I usually decide on feed contracts around harvest. 145p will not fill in the hole. As for reinvestment, no chance. Repairs at present are baler-twine based!
• Already cut herd from 320 sows WILL NOT continue with idle promises, even though wheat is falling I suspect final feed prices will not come down in relation, they have plenty of excuses some genuine! I echo the baler twine comment.
• I am 60 in July and could retire comfortably. I cannot afford to jeopardise that position. I have two employees with 28 and 40 years service. I fear for their future even with substantial redundancy payments earmarked.
• I see the next three months as critical. The current straights prices, without a serious jump in finisher prices, would lead to huge losses.
• If the pig price continues to rise and wheat and soya, plus minerals etc, drop a bit I might stay in and struggle on. Arable farming looks okay but the oil price is really starting to hurt. My combine uses £5 of diesel per acre at 70p and it may be £1 at harvest. With fertiliser prices at £500 for PK compounds, I reckon my pig muck is worth £40 an acre. I lost money in 2008 but it may be worthwhile sustaining a loss in the short term to make gains in the longer term.
• Tell the retailers and processors to give us a ring and I can explain in simple terms that even they can work out that if our pigs are worth less than the cost of feed then we cannot go on for long...
• For those with arable as well, with the forecast for nitrogen and diesel where they are, cereals around £120 a tonne won't be any more profitable than they were at £80 or £90 when inputs were cheaper. Pigs might not look so daft after all if the price goes up. Here's hoping!
• With hi-pro bought and 100pc of wheat and barley about to be harvested, prices worldwide will go up to save our bacon! Or - as they say - WE ARE ALL DOOMED.
• Difficult to make clear the patchy nature of forward bought stuff compared with historic across the board forward buying. More exposed than ever now because of the volatility. Because the swings are so great the gains/losses can be so much greater than ever before.
• With NVZ regs on the horizon I will not spend for slurry storage unless I can see a clear return. So ergo, no pigs.
• I have to think twice before I buy a bag of cement or a box of welding rods. Bale string is cheaper. What a state to be in! My grandfather used to be a bale string farmer (progress).
• The feed contract I took out on January 1, 2008, for nine months, was based on wheat prices of £185. I have just had a quote from October based on a wheat price post harvest of £135, yet the feed price has not dropped and the weaner ration has even increased.
(Thanks to all who took part in the survey. There were 39 responses but four were discarded because no name was given. There will be a more detailed report in June Pig World.)
May 29
Food crisis agenda
Compared to February 2007, world prices in early February 2008 stood at +113pc for United States wheat, +93pc for European Union wheat and +83pc for United States soybeans. World agricultural commodity prices (dollars) rose 70pc between September 2006 and February 2008.
In response, the European Commission wants to make agriculture more market oriented. And it will examine the effectiveness of the food chain and in particular investigate the concentration and market segmentation of retailers.
The Commission intends to seek a sustainable biofuels policy, and it will encourage agricultural research and development in developing countries. It will call for a more coordinated international response to the global food crisis, including a shift in the development agenda to target development aid at longer-term projects to revitalise agriculture.
Shoppers prepared to make special
effort to save pig industry
The majority of people surveyed for the British Pigs Are Worth It Campaign say it is important to support British farming and are prepared to pay more for pork, bacon, sausages or ham to help British pig farmers through the current crisis. Consumers told the survey they are prepared to make a point of looking for British pork, bacon, and ham when shopping, to support pig farmers and higher animal welfare. This and other key messages about welfare standards and consumer support will be rolled out in a media blitz by the Pigs Are Worth It Campaign.
So far, biofuels have had little
effect on global food prices
European biofuel production has had little effect on global food prices because biofuels use less than 1pc of European Union cereal production, according to a Brussels report.
Nevertheless, further studies are needed to determine how the 10pc European Union target for biofuels in transport fuel will influence agricultural markets and land use. A rising share of biofuels from 1pc in 2005 to 10pc in 2020 would imply a 30m tonne increase in feedstock use.
You can bet on pigs
Pig racing will be taking place at Uncle Henry's in North Lincolnshire on Open Farm Sunday this weekend. Other attractions will include a farm machinery demonstration, a mini beast hunt (see how many creepy-crawlies you can collect) and a vintage tractor display. Uncle Henry's is the successful farm shop and restaurant complex opened by Meryl Ward and husband Steve last year.
BPEX introduces practical how-to series
The following series of practical briefing notes is now available for download from BPEX.
Emergency meeting at House of Commons
An emergency meeting has been called by the pig industry's Pigs Are Worth It Campaign. It will be held at the House of Commons on Tuesday June 10, when politicians will be warned the British pig industry remains under threat and the industry crisis will continue into next year.
Many pig farmers are still losing over £20 a pig, and need a further 10-20p a kilo to break even, says the Campaign. British pig farmers are forecast to post losses of £200m this year. The country’s breeding herd is expected to decline a further 10pc on top of the 50pc reduction it has experienced over the past decade.
"While our efforts so far have produced results, it is not enough to effectively meet the scale of the challenge, and if we wish to secure the future of the United Kingdom’s pig production and primary processing sector we must take action now.
"We need the help of parliamentarians to continue to raise political and public awareness of the issue and to urge government to act to rectify the current market failure which has the potential to lead to the loss of the United Kingdom pig herd."
May 28
Former Blur guitarist to
promote pig industry's cause
Radio and Press interviews with former Blur bass guitarist turned pig farmer Alex James are being organised by the Pigs Are Worth it Campaign. James famously gave up vegetarianism in 2006 when he bought his farm and began rearing animals for meat. He writes for The Independent and The Observer. He is a supporter of the Pigs Are Worth It Campaign and is fully aware of the issues pig farmers are currently facing.
Better prices on the way
Stronger, more stable live pig prices towards the end of the year are predicted by Manitoba Pork Marketing Co-op. Live pig prices have iimproved over the past few weeks.
May 27
Daily Mail accuses supermarkets
of profiteering
Daily Mail readers were in for a treat when they opened Saturday's paper and read the two-page spread "Save Our Bacon" by Robert Hardman. He outlined the industry's plight accurately and robustly, stressing that pig-keepers are unsubsidised and are not whingers. Read the article here.
Not all farmers are "raking it in"
Following an article headlined "Our supermarkets are worth every penny" by Tracy Corrigan in today's Daily Telegraph, BPEX and NPA chairman Stewart Houston is to write to Alistair Darling to remind him that not all farmers are "raking it in".
In her article, Corrigan says: "Last week, Alistair Darling summoned the big food retailers to Downing Street to find out what they can do about food price inflation. They must have been tempted to remind him of the repeated investigations by the competition authorities into allegations that they used their combined muscle to squeeze suppliers and competitors. A couple of British supermarkets cannot control the vagaries of the global commodities market. So farmers are doing well. I heard several of them admit as much on Radio 4, which means they must be raking it in. Good for them, but it does rather destroy the myth that they were being systematically victimised by the supermarkets."
Political lobbyists employed by the BPEX/NPA Pigs Are worth It campaign team says constant highlighting of the pig industry's plight in Parliament means Darling is already well aware of the problems facing pig farmers — but Stewart Houston's letter will act as a timely reminder.
I'll champion pigs, says Britain's favourite chef
Celebrity chef Jamie Oliver has pledged to make being a "champion for pigs" his next worthy cause. Oliver, who has already championed free-range chickens in his television documentary Fowl Dinners, was speaking at the annual literary festival in Hay-on-Wye, mid Wales. He said he had considered concentrating on beef or milk, but went with the popular choice of pigs after asking his audience."
l NPA Trade Directory l Mechanical data l National Pig Association l Defra l BBC weather l
l Environment Agency l Food Standards Agency l Quality Meat Scotland l Scottish Executive l
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