Boom and bust scenario for UK pig sector needs replacing

The backlog, which at its peak last year was estimated to be around 250,000 pigs, has come down to 70,000 and could finally be cleared within 5 months, according to one leading processor.

Steve Ellis, Karro Food Group chief executive, was one of the speakers at the the British Pig and Poultry Fair, held at the Stoneleigh Agricultural Centre in Warwickshire, on May 10th and 11th. Producers, suppliers and the allied industry came together for 2 days of talking, sharing ideas and planning ahead. During his speech, Ellis said that current UK pig slaughter is between 230,000 and 240,000 pigs a week, around 15-25,000 more than current demand and could fall as low as 183,000 by August.

“We are incentivised to go for a boom and bust mentality which is hugely wasteful to our supply chain”, said Steve Ellis, Karro Food Group chief executive.

Karro, which processes almost a third of the UK pig cull as well as farming 26,000 sows in Scotland, has slaughtered an additional 80,000 pigs through its Malton plant in North Yorkshire.

“When profits are good, it stimulates additional pig production and vice-versa…. We are incentivised to go for a boom and bust mentality which is hugely wasteful to our supply chain. The current market is a disaster for processors and producers. We have a high cost of production, a low pig prices and a low meat price.”

Ellis said it was time to relook how the industry worked. Tactical buying needs to be replaced with security of supply; total carcase balance should be brought forward rather than managing individual pork categories. There also needs to be integrated supply planning, long term contracts and feed ratchets, as in the poultry meat sector, rather than index linked.

Rob Mutimer, National Pig Association chairman, said that many producer contracts were not fit for purpose, marketing strategies had not advanced in the past 20 years and the sector (retail, processor and feed) was rife with monopolies and oligarchies.

Mutimer said the government looks at which changes could be made across the supply chain and that an announcement is likely within the next 6 months. Legislation could be brought forward or an Ombudsman could be established. Both speakers said that better collaboration is needed between producers, processors and customers in the supply chain.

There was also deep frustration at comments made by Brexit Minister Jacob Rees-Mogg, suggesting the government would make no further controls on food imports from the EU this year, even though border inspection posts are ready. With African Swine Fever (ASF) being discovered on the outskirts of Rome, Italy, early May, there are fears that current levels of biosecurity are not as high as originally promised post-Brexit.

Costs on his North Norfolk farm has risen by £0.52/kg (€0.61) since the start of the Ukraine War, and he added that his production costs were likely to be £2.43/kg (€2.86), and the sector was still struggling from a lack of skilled labour.

Angela Christison, AHDB pork sector director, said that while margins are at an all time low, pork remains in demand from both British and overseas consumers. Exports last year brought in £567 million (€668 million) to the supply chain or £50 (€59) a pig.

Duncan Wyatt, AHDB lead analyst, also tried to provide some optimism to the hard-pressed sector, saying there will be a decline in production in the second half of the year. Imports and exports that had fallen by 21% and 46% last year due to Brexit and Covid, reversed in the first 2 months of this year, showing rises of 30-55% respectively. Exports to Asia and the US are seen as markets in the year ahead with the US market having potential for higher value cuts. The recovery of China’s national herd and ongoing Covid problems means that the market will be restricted to heads and trotters.

Susan Stewart, AHDB senior export manager, said the recent opening of new markets in Mexico, Chile and the Dominican Republic supports the reputation of British pork abroad, adding that further trade shows will be taking place in Canada and Manila in the next few months.

Liam Bryne, AHDB marketing director, said his organisation is working with Waitrose and another retailer to improve the look of pork product placement on retail shelves, adding that recent pull pork shoulder and pork medallion campaigns had seen double digit rises.

The Pig and Poultry Fair also saw the soft launch of Defra’s Animal Health and Welfare Pathway for Pigs, which is designed to improve biosecurity to control endemic diseases such as Porcine Reproductive and Respiratory Syndrome (PRRS), which costs the industry an estimated £52 million (€61 million) a year.

It will also work to reduce sow confinement during farrowing and reduce causes of stress which can result in tail biting, with the ultimate goal of not having to dock tails.

Pig farmers with more than 50 animals are currently eligible for a Basic Payment Scheme (BPS). They can apply to join the scheme this summer with full commercial onboarding taking place later in the year. It involves a 2 hour veterinary visit to discuss the health and welfare of animals on farm and an agreement on achievable actions.

Anonymised information has to be submitted, including the results of diagnostic testing. Christine Middlemiss, chief veterinary officer at the UK Department for Environment, Food and Rural Affairs (Defra), was quick to point out that this will not be used by Defra for inspections. Farmers will have flexibility to focus on what is most relevant to their farms and the government will have a greater understanding of the national disease picture, support PRRS control of measures and productivity. Farmers will be paid £684 (€806) per review.

Stewart Houston, pig sector lead, said the calamitous situation in the pig sector had led to the decision not to roll out the scheme in full immediately but said the pathway’s vision of financially rewarding farmers, stimulating market demand and strengthening the regulatory baseline was a sound one.

Middlemiss said it was vital to get a picture of the nature of endemic diseases across the national herd and that the government has steered away from taking a prescriptive approach.

Martin Jenkins, Defra policy lead, said the opportunities of the Animal Health and Welfare Pathway were enormous and included reducing the use of medicines and antibiotics as part of the government’s One Health agenda and curbing greenhouse gas emissions, particularly in the cattle sector by tackling Bovine Viral Diarrhoea.

Environmental challenges, such as ammonia and methane emissions and the move to net 0 were raised in the context of whether this was possible in the light of the Ukraine war and soaring input costs. Jonathan Foot, AHDB head of environment, said current market pressures should help accelerate the UK towards net 0. Good environmental performance was also good economic performance. “Net zero does not conflict with producing high quality food.”

Dr Foot said there were key things for producers to look out for in the years ahead, including policies to increase forest cover from 13-17% of UK:

• 2022 – Introduction of Farming Rules for Water with restrictions on slurry and manure in autumn.
• 2025-27 – Mandatory building design for intensive livestock units introduced. Slurry pits/stores to be covered; slurry spreading to be allowed only when using trailing hoe or direct injection.
• 2030 – Target to cut ammonia by 16% and methane by 30%.