Food manufacturers to face pigmeat double whammy

16-Aug-2012 - Last updated on 17-Aug-2012 at 10:33 GMT

Pork prices could soar if high feed costs and new EU welfare rules prompt producers to quit production

Food manufacturers could face steep rises in pig meat prices, as soaring feed costs drive UK pig producers out of business and new EU welfare rules force continental producers to quit.

Jon Bullock, communications manager with the British Pig Executive (BPEX), told FoodManufacture.co.uk: “There will definitely be a significant increase in prices for food manufacturers as UK pig producers struggle to cope with much higher UK feed prices.

“That will be magnified when the sow stall and tether ban comes into force on January 1 2013 if [continental] producers are driven out of business.”

Pig farmers have faced a 25% increase in the cost of pig feed over the summer as the US drought has cut yields of wheat and soya.

A recent survey by the National Pig Association (NPA) revealed that if pig prices and feed costs remain at present levels, producers representing 10% of the weekly pig kill said they would continue production only until Christmas.

Run out of bank funding

By about that time, producers representing 12.5% of the weekly pig kill said they expected to run out of bank funding.

Also, producers representing about 66% of the weekly kill said they would stay in production for a further 12 months.

Respondents supplied 46,080 slaughter pigs a week, covering about 30% of Great Britain’s weekly output of pigs.

The NPA said: “The British pig industry is in a race against time. It needs to persuade all actors in the supply chain, between now and the end of the year at the latest, to work together to achieve a producer price that reflects the recent rise in feed commodity prices.”

BPEX predicted that up to 10% of European pig farmers would stop production when new EU welfare rules ban the use of sow stalls and tethers. While UK producers already comply with the new legislation, many continental producers will need to invest heavily to meet its requirements.

Stephen Howarth, BPEX senior analyst, described the likely outcome as “simple economics”.

Real shortages

“Production losses on this scale would lead to real shortages of pig meat in the EU market and would mean substantial price increases and processors and retailers competing for supply,” said Howarth.

Clare Cheney, director general of the Provision Trade Federation, said her organisation, the Department for Environment, Food and Rural Affairs and BPEX would lobby Brussels to ensure that all 27 member states enforced the sow stall and tether ban.

“We have all pledged to do our very best to ensure that all pigmeat products come only from producers who comply with the legislation,” she said.

The British Meat Processors Association said there was no excuse for governments failing to implement the new rules.“These governments have had more than enough time to ensure that the ban comes into place on time and works to full effect,” said a spokeswoman.

Pig production in numbers