Pig producers are feeling more positive about their situation, as prices rise and costs ease slightly, but, after two years of crisis and heavy losses, there is still a very long road ahead to recovery, according to producers and allied industry figures on the NPA’s Pig Industry Group (PIG).
The pig price reached a record high of beyond 212p/kg this week, having increased by 11p over the first few weeks of this year. While the overall input cost burden remains high, the wheat price continues to fall. Feed wheat for March was quoted by AHDB at £212/kg today.
The NPA’s PIG met in London on Tuesday and during the regional round-up, producers welcomed the brighter picture, but there was also plenty of caution and the clear message that there will be no rapid recovery from the dire situation it find itself in.
The Northern representative described the situation as ‘slightly better’, with ‘quite a big range in how confident people are feeling’. “Those who have been hardest hit over the past two years are still feeling fairly low. Prices have moved up, but the cost of production is still very high,” he said.
One big factors in this varied outlook is the extent to which feed prices have been locked in at far higher levels, meaning many some producers are yet to see the benefits of the recent downward trend in feed ingredients.
This was echoed by the South West representative, who said that whilst producers who were using the spot market to buy raw materials were paying increasingly less, others on long-term fixed contracts were still ‘paying significantly over for their grains’, which he said had caused ‘a bit of disquiet’.
He also highlighted frustration in the region over the fact that while the spot price for pigs is in excess of 220p/kg plus, the contract price is ‘still dawdling at around 212p/kg’.
The Eastern representative said that after a tough two years, producers are now seeing ‘real positives’, although he highlighted reports of respiratory health issues in the region.
The Midlands representative also highlighted some ‘general health issues’ among pigs, which he suggested were potentially a legacy of the backlog, which saw overcrowding on farms, while farmers were unable to carry their usual routines. “We are also now seeing effects of the hot summer on production,” he said.
He said producers remained sceptical about how long the better pig price would last and whether ‘we will be allowed to get to the sort of price we need by retailers’. “One bright spot, however, is that a lot of processors are looking for pigs anywhere they can get them,” he added.
The South-Central producer representative said more producers had been hit by summer fertility than had been anticipated, which is likely to further squeeze pig numbers, which, according to producers in the region, are already very tight, with some abattoirs actively looking for more pigs.
“There are a couple I have spoken to, who, with the cull sow price going up, are still not putting retirement off the agenda. They don’t get the feeling this is going to be a positive situation for long,” she added.
She said local farmers were also ‘very worried about drought’, with reports of very low aquifers and boreholes drying up already.
Veterinary and pharmaceutical views
The veterinary representative backed up the comments about disease levels, including ‘rumbling respiratory disease’.
She said the first Pig Pathway Animal Health and Welfare Reviews had now taken place, with more to come over the next few months.
The pharmaceutical representative pointed out that sales of vaccines have been falling in line with sow numbers, with no indication, however, that producers were turning away from vaccines to cut costs.
Nutrition
Cereal prices continue to come back, with all eyes this week on whether the Ukraine corridor for exporting crops and fertiliser, due to end soon, will be extended. This will have a big impact on future prices, the feed representative said.
However, the price of soya has increased even further, currently at ‘eye watering’ levels in the mid-£500s, on the back of drought in Argentina, despite a bumper Brazilian harvest.
“As we have heard, some people who have fixed into higher priced contracts are not seeing benefit of reduced cereal prices. Overall, I would say optimism on farm is slightly better – at least not as dire as it was,” she said.
Building and equipment
Despite one or two ‘green shoots’, it remains ‘very quiet’ in the buildings and equipment sector. “It takes a while for production equipment to grow through any return to confidence among primary producers, so we are still waiting for that cycle to unfold,” the representative said.
He said there was, however, a lot of interest in energy cost reduction and efficiency.
Marketing and processing
The marketing representative said producers were ‘a bit more positive’, given where the pig price is, but costs remain high and some producers are still talking about getting out. “Pig numbers are clearly down and there are a lot of questions for the future,” he said.
One of the processor representatives said businesses were expecting domestic supplies to be down in the short term, but to recover over time. He also highlighted the pressure coming from retailers to deliver long-term welfare requirements and carbon reductions.
Another processor representative said their business was aware that ‘structural changes’ in pig supplies were still happening, with a lot more to play out on that front. He noted that indoor Red Tractor pigs were getting closer in price to outdoor-bred pigs.
A third noted that pig weights have remained pretty level in recent weeks – the SPP sample has averaged just over 89kg all year.