Positive signs for the UK pig industry

DSC02311Recent figures suggest that this year is starting to look like a more positive period for UK pig farmers, many of whom are eager to move on from the torrid experiences they suffered in 2012.

Last year provided an incredibly challenging twelve months for pig producers, with an international shortage of soya and wheat leading to record high feed prices that nullified the positive influence that increased pig prices should have had within the domestic industry.

At the start of 2012 the average cost for Soya meal stood at £260 a tonne; twelve months later this had reached an average price close to £500. As a result, the cost of production for a single pig rose to over 170p per Kg by the end of 2012; a 25p per kg increase compared to the same point in 2011.

With spiralling costs of production, farmers soon found themselves in the untenable and despairing situation of having to produce animals at a financial loss, with well-advertised reports suggesting that that at some points in 2012, farmers were producing pigs for market at a loss of between £14-18 per animal.

As a result there was a substantial decline in the national herd size, as many producers killed off substantial proportions of their adult stock well below standard finishing weights in order to reduce their expenditure on feed.

In July 2012 abattoirs reported that they were butchering on average a quarter more adult animals compared to the same point in 2011; continuing the yearly trend of a 7% average increase in culling numbers as producers desperately tried to ‘destock’.

Rather than investing in the future and expanding, many pig farmers were being forced to take the counterintuitive action of contracting the scope of their business.

These reductions were reflected in the end of year pig census, with figures indicating that the national herd size in 2012 was almost 50% down compared to data collected in the late 1990’s.

With this seemingly endless stream of challenges throughout the year, it came as no surprise that in DEFRA’s recently published Farm Income Report, pig farmers were the lowest earners within the farming sector during 2012, earning just £34,500 a year; some 45% lower than the average household income within the sector.

Thankfully the New Year seems to have brought about some improvements within the UK pig industry and there is a cautious optimism about the future.

The start of 2013 saw a reinvigoration of the pig market, as domestic supermarkets and consumers turned away from imported pig meat in the wake of the horsemeat scandal; by March, pork imports were down by 7% and thanks to increased demand, UK pig prices have increased.

Even in the face of plentiful supply and reasonably priced pork on offer from the EU member states, the first quarter of the year witnessed increased purchases of UK pigs, with the knock on result of average finished pig prices rising by 15p per kg. By July, quality finished pig prices had reached an all-time high, before levelling out at a price of 169pence per kg; over 12% higher than the same point the previous year.

Consumer spending on UK pork increased slightly by 1% and consumption of sausages rose by 10%, as shoppers look to source cheaper forms of domestically produced, ethically produced protein.

These positive signs were accompanied by a gradual decline in feed prices which have come about thanks to good predictions regarding the size of domestic and global crop yields. Most significantly, the output of maize from the United States is set to be strong this year, with good weather providing confidence in strong yields and pushing down prices.

This confidence has helped lead to a reduction in overall costs, with the average cost of production standing at 159p per kg at the end of July, having fallen by over 14p per kg since the start of the New Year.

Whilst these positive signs within the UK pig industry will be reassuring to pig farmers, the industry as a whole still finds itself in a difficult situation.

The breeding sow population that was killed off during the ‘destocking’ that occurred during the previous year needs to be replaced and many of pig units are in need of modernisation; as such a slow, steady stream of investment and development by many farmers is required over the next few years to re-establish their financial viability and competitiveness.

As such, it has to be hoped that the price and demand for UK pigs stays buoyant enough to allow this to happen and that the UK pig industry as a whole can re-establish itself as the large and successful entity that it once was.

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