Commodity Watch - Languishing pig prices continue to concern local producers

Saturday, 23 May, 2015

UFU Watch Commodity Watch

Representatives from the Ulster Farmers’ Union Pork and Bacon Committee continue to express their growing concerns in relation to the significant reduction in the price that they are currently receiving for their produce.

Speaking to members at last week’s Balmoral Show discussions around the drop in price for pigs was raised with the UFU team.  Pig prices in Northern Ireland have fallen dramatically over the last 12 months, with the average return for a NI producer having fallen over 30p/kg (20%) year-on-year which now stands at a region of £1.20/kg. This ongoing reduction is causing a great deal of concern amongst NI pig producers, with many farmers now operating at a loss and leading some to seriously question the future viability of their businesses. Whilst farmers recognise that the wider UK and EU pig markets have suffered significant price decreases over the same period, local producers remain frustrated by the fact that farmers in GB can currently expect to obtain more than £1.31/kg for their produce, even though the pig meat produced here in Northern Ireland meets the same strict Red Tractor production standards. In effect, an unjustified price differential exists between meat produced here in NI and in GB. Additionally, this price differential has grown from around 5p/kg in the middle of last summer to almost 12p/kg. Adding further insult to injury is the fact that producers in GB are also able to take advantage of significantly lower feeding costs which is usually around £20-£25 per tonne cheaper due to lower local grain prices.

In reaction to this, representatives from the UFU have held a series of meetings with supermarket representatives, local meat processors, and the Stormont Agriculture and Rural Development Committee in order to highlight the potential impact of this crisis if prices are not seen to improve in the near future. The UFU has written to both the DARD and DETI Ministers to ensure that they fully appreciate the serious concerns of local producers, particularly in the context of delivering on the Agri-Food Strategy Board’s ‘Going for Growth’ Report.

Going forward, the UFU will continue to closely monitor market developments and has already entered and continues to have discussions with the British Pig Executive (BPEX) around the potential for the development of a Northern Ireland Pig Pricing Index, similar to the Average Pig Price (APP) reporting system that currently exists within GB that gives producers greater transparency into the average price being paid. Looking across Europe, markets appear to have stabilised in France and Denmark in recent weeks. Whilst in Germany, prices appear to be turning higher in line with warmer temperatures having finally lifted demand for barbecue meat. As a result, slaughtering facilities are gradually starting to increase their orders for larger number of pigs and it is hoped that with this recent increase in demand, local producers may begin to see their margins start to recover.