Feed prices threaten pig industry survival
The Scottish and Danish pig industries have warned that prices must rise if the sector is to survive.
Soaring feed prices are causing pig producers to incur heavy losses in both countries.
Danish Pig Production said over the last few months feed prices, which represent a significant element of producers' cost, have almost doubled but there has been little change in the market price for pigs. It said next week prices for young pigs or weaners will fall by DKK 16 per pig, as a result of the impact of these higher feed products on the profitability of producing finished pigs.
However, it is urging its members to remain clam and believes the outlook for 2008 is a more promising one. "I feel however, that the situation may tempt many producers to leave the industry, rather than continue to lose money," says Nicolaj Nørgaard, DPP's deputy director.
DPP also calculates that pig producers in other European countries will be just as badly hit by the current situation.
Nørgaard said: "The important thing now is to stay coo. We expect a better balance between feed costs and prices during 2008.
"Once a decision has been made to close down production, restarting would be a much more difficult proposition, even if things have improved."
He also anticipates that many producers will need to draw on credit facilities for some time to come. "Depending on when the balance of the market is re-established, a number of pig farmers will have to draw on their credit facilities to some degree. It is my impression that many of our producers are well prepared for such a situation, with a reasonable level of capital asset value, an efficient production system and the real prospect of positive support from their financial partners. I am also confident that our industry's financial backers will also remain calm and be prepared to show patience through the current difficulties."
Meanwhile pig producers in Scotland, operating at a loss, are considering leaving the industry. "The only obvious solution to this problem is that price per kilo per kilo paid to producers for their pork and bacon must rise. We require an absolute minimum of 25 pence per kilo extra just to cover the increased we've seen in feed prices.
"Ultimately the larger retailers are responsible for the prices paid to producers. The big four supermarkets must pass down all recent price rises on the shelf back down to the processor and ultimately to the framers in order to secure the future of their suppliers.
"If the price of pigment does not rise significantly in a short space of time then many producers will have no option but to cease production."