Pig industry needs to hedge its bets

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Related tags: Home grown cereals, Management

With price volatility set to continue during 2008, meat producers and processors have been advised to make greater use of risk analysis and "hedging"...

With price volatility set to continue during 2008, meat producers and processors have been advised to make greater use of risk analysis and "hedging" to cope with surging feed costs and currency exchange rates.

Spiralling wheat prices in particular mean that the use of derivatives have a lot to offer, says Alistair Dickie, director for crop marketing at the Home Grown Cereals Authority (HGCA).

"The modern tactic is about prudent use of derivatives. Volatility is a weapon as well as a force against you," he told an Outlook conference organised by the Meat and Livestock Commission during a session aimed at pig producers.

Forward planning was essential, he said: "When the opportunity is there you have to take it seriously." Addressing pig producers directly about currency fluctuations, he said: "Your prices will be influenced by the foreign exchange rate and you ignore it at your peril."

He added: "Staying out of the raw material market because the pig prices are not right is not the right solution. I know it works; you need to have more planning and you need to be more aggressive and assertive."

The HGCA is organising two workshops on price risk management on March 11 and 12. For details visit http://www.hgca.com

Related topics: Supply Chain, IT, Services

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