Exodus from pig industry feared as prices down by a third in two years
A combination of increased production, falling demand and an unfavourable exchange rate has seen pig prices plummet, prompting fears of a further exodus from the sector.
The fall in pig prices has left many producers fearing for their future
The price farmers are receiving for their pigs has fallen by a third in a little over two years, a trend which will force many to leave the industry if it continues, a report issued by AHDB Pork has warned.
Since late 2013, the average pig price has fallen steadily, with price reductions accelerating in the past 12 weeks. These have seen another 13p/kg (about £11/head) disappearing from margins.
Pig prices are currently at a near eight-year low and, in real terms, prices are at their lowest since 2000.
Stephen Howarth, AHDB Pork market specialist manager, said increased efficiency and productivity resulting in record weights has led to more pigmeat on the market, as demand for pork has dropped, despite falling prices.
He said: “At the same time, demand for pork has dropped, even though the price is falling.
"UK pork is having to battle hard against cheaper EU imports, exacerbated by the weakness of the euro against sterling and a supply glut on the continent due to increased production and closure of trading routes to major export partners.”
Key findings in the report include:
- Retail purchases of pork have been decreasing, despite falling prices. Consumers are increasingly switching to more convenience based foods, where pork does not feature strongly, as well as to chicken, and the image of fresh pork is becoming dated and jaded, a trend which the current Pulled Pork advertising campaign aims to reverse
- Along with higher production, this has contributed to the downwards pressures on pig prices – currently at a near eight-year low; in real terms, prices are the lowest since 2000
- UK pork has had to compete with cheap European imports, with a continental supply glut, accompanied by a weak euro
- This has further driven down the value of UK pork – although export volumes have grown slightly, especially with global export partners such as China
- There is little sign as yet of any herd rationalisation in the UK, as the falling cost of production helped to cushion some of the price falls in 2015
- However, pig prices are now at a level which is lower than average producer cash costs, so we are likely to start to see producers leaving the market and breeding herds becoming rationalised
- This activity has already been seen in some EU member states.