September 5, 2007

 

British hog farmers face high feed costs

 

 

Hog farmers in the UK are facing production cost pressure as sharp rises in the price of feed ingredients continue.

 

Ex farm feed wheat prices reached GBP154/tonne on August 31, compared with GBP79.10/tonne twelve months earlier. Futures prices also rose with values of more than GBP180/tonne available for November 2007 movement.

 

Although EU pork producers are also facing similar problems, with the exception of Swedish and Parma ham producers, British production costs are the highest in Europe.

 

UK cull sow abattoirs are also reporting that several herds are being culled adding to the post foot-and-mouth-disease backlog already in the system.

 

The National Pig Association and the National Farmers Union (NFU) are calling for meetings with retailers to press for immediate pork price rises.

 

Although reports are circulating of seven percent increases in retail meat prices, it is yet unclear if these will be passed back through the supply chain to hard pressed pig producers.

 

NFU chief economist Carmen Suarez has warned that in the past twenty years food retail prices have increased by over 50 percent while farm gate prices have stagnated. Over the same period food has become 20 percent cheaper in real terms.

 

Pig producers are now facing a near 100 percent rise in the cost of feed cereals.  Unless these are matched by commensurate increases in pig prices, experts warned that many in the industry will be unable to continue. Supplies will therefore be significantly reduced in shops, according to Stewart Houston, chairman of the National Pig Association.

 

Feed wheat prices in Britain rose to record highs last week and prices have doubled since early April.

 

Charles Bourns, chairman of the poultry board for Britain's National Farmers Union said retail poultry prices also needs a 15 to 16 percent raise to offset the increase in feed costs.

 

Britain's largest food retailer Tesco tentatively raised some pork and poultry prices in the last few days and the industry is keenly waiting to see if others will follow.

 

Houston said he believed that if other supermarkets do not follow within a fortnight then Tesco might rescind the increase.

 

Britain's pig herd has fallen sharply over the last few years to around 454,000, as of June, compared with about 800,000 a decade earlier.

 

Outbreaks of classical swine fever in 2000 and foot and mouth disease in 2001 contributed to the decline and industry sources also argue higher animal welfare standards in Britain has put them at a competitive disadvantage.

 

Houston said if the pig herd were to drop much more it would "knock efficiency in the processing sector and make it difficult to come back."