Fair share of retail price key to pig sector survival

In the last five weeks the Standard Pig Price (SPP) has risen by almost 20p per kg, some supermarkets have announced record profits, some feed suppliers have called force majeure on forward bought products and pig farmers are still losing money according to Jamie Wyllie, chair of NFU Scotland’s Pigs Committee.  He writes:

Processors and supermarkets have taken the opportunity to make large PR statements about the amount of money that they are putting into their spot portion of the price we are paid but it’s nowhere near enough. The Cost of Production (CoP) for a pig right now with today’s feed and electricity prices is around 204p per kg. While I appreciate that the pig price has risen and that this week we saw the largest rise in price I have ever seen, we are still a long way from even covering our costs.

Recently, I have again heard the all too familiar tale of a fellow producer who has put their pension into the business to keep it afloat and is moments away from closing the doors on his farm for the last time. The cost of feed, electricity, diesel, labour and haulage to name but a few inputs have increased dramatically in the last year.

Feed has increased by 60 per cent since February 2021, with 35 per cent of that being directly linked to the dreadful situation that is occurring in Ukraine. With almost 70 per cent of the cost to produce a pig being feed, this unforeseen increase in feed cost has had a devastating affect for the pig farmer.

The next biggest increase to occur is one being felt by everybody, electricity prices. I received a quote yesterday offering me 32p per kwh which will take my electricity bill per year to over £500,000. Whilst we have done our best to generate as much of our own electricity as possible (now being about 30 per cent self-sufficient from wind and solar) the 100 per cent dream seems to have been hampered by issues such as planning and grid availability.

Our most valuable asset is people, we employ 40 people across our diverse business and without our staff we wouldn’t have a successful business. We took the decision to increase all our staff pay in line with inflation this year. Their cost of living is going up and we must ensure that they are not left in a worse place by coming to work every day. This now takes our total labour cost to over £1.3m per year. We took this decision even though our industry is making record losses because it is morally correct, but we need retailers and processors to understand this and make similar moral decisions to their suppliers.

I was quite saddened to hear recently of another major retailer announcing record profits whilst an entire sector of the food industry is on its knees. We have long believed that the retailers have been keeping an unfair share of the final sale price and this announcement suggests it is the case. We calculate that year to date; the UK pig farmer is currently only getting around 37 per cent of the final sale price when in recent years it has been up to 42 per cent. This 5 per cent may not sound like very much but it would increase the price paid to the farmer by around 19p per kg. Where did that 19p go?

Retailers and processors we need a bigger share of the final price, and we need an increase to what we are paid now. If the price does not make it over £2 per kg soon there won’t be a British industry left.

Author: Jamie Wyllie

Date Published:

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