Farming News - Latest pig price increase an 'insult' as industry continues to lose millions
Latest pig price increase an 'insult' as industry continues to lose millions
The latest increase in the pig price is an insult to the hard work of the industry, NPA chairman Richard Lister has told processors.
The NPA has calculated that British pig producers are still losing millions of pounds each month due to the failure of UK pig prices to move in line with clear global trends.
AHDB’s most recent update showed the EU-spec SPP rose 1.51p to average 144.45p/kg last week. While this represents another week of prices moving in the right direction, the meagre increase means that, yet again, UK producers are not receiving anywhere near the returns they deserve, given current Asia-driven global market dynamics.
The price remains just under 3.5p below last year’s level and still behind EU prices, which have surged by more than 30p/kg since early February, while UK prices have gained just 6p.
Although the headline gap between EU and UK prices is currently around 2.6p/kg, the actual gap is much bigger.
AHDB estimates that another 6-8p/kg needs to be added onto the EU reference price for a like-for-like comparison to account for issues like levies, deductions and haulage costs UK producers pay. NPA chairman Richard Lister believes the difference could be more than 10p/kg.
The NPA has calculated the cumulative losses being incurred by UK producers, based on the difference between the SPP, the main measure for the average UK price, and the EU reference price.
We have added 6p to the EU price as that is the minimum figure required for a fair comparison and equivalent prices to producers.
We have also calculated another figure, adding 15p to the EU reference price. This reflects the usual price premium British producers expect over imported EU product due to the unseen costs and production differences, for example in welfare standards.
The weekly price differences using the above methods are multiplied by the weight of UK pigmeat sold in kgs - based on weekly figures for slaughtering x carcase weight - to show the income domestic producers are losing out on.
What the calculations show
The calculations show that:
- With 6p added to the EU (for equivalence) UK producers have been losing out on well over £1m a week between mid-April and mid-May. This adds up to more than £8m over the five-week period.
- With 15p added to cover the usual UK premium, the weekly losses range from £2m to in excess of £3m per week, with total losses over five weeks exceeding £13m.
|Week ended||UK SPP (p/kg)||EU ref price (p/kg)||+6p: Weekly UK producer losses (£)|
+15p: Weekly UK producer losses (£)
NPA chief executive Zoe Davies said: “These figures highlight the extent to which UK producers are losing out because of the actions of UK processors. We are talking about losses in the region £8m to £13m over just five weeks, which is totally unacceptable.
“We do not believe the huge differential between UK and EU prices is justified and want to see far more significant increases in the coming weeks.”
Speaking at last week’s Pigs Tomorrow conference, Tulip’s Andrew Saunders blamed the slow rate of UK price rises on processors putting too much pigmeat into storage in the early part of this year due to Brexit stockpiling, along with weak demand.
AHDB said UK prices are now beginning to respond to the high price levels in much of mainland Europe, suggesting the influence of Brexit stockpiles is ‘wearing thin’.
Estimated throughput totalled 160,200 head last week, down 3,200 head compared to the previous week and 6,000 head lower than last year. This reflects ongoing reports of tightening supply.
However, the recent UK price rises were ‘too little, too late’, Richard said. “The price continues to push further ahead on the continent – the Irish price was €1.78/kg (£1.57) this week. The latest increase is a further insult to the hard work of the pig industry,” he said.
“The recent rises are long overdue and what we are seeing now does not come close to compensating producers for the millions of pounds lost since early February.
“The excuses given by processors simply do not stack up – especially when we see the likes of Cranswick posting profits of nearly £90m and looking to invest £100m over the next year.
“Producers are deeply unhappy and we will continue to voice their concerns and seek proper answers. We will also continue to investigate how we can improve the long-term pork pricing structure.”