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Frustration at Lack of Response to Proposal to Help Secure Future of Scottish Pig Sector

NFU Scotland has expressed its mounting frustration at the lack of response to its proposal for an ‘on-goers scheme’ that will offer a crucial lifeline to Scotland’s pig sector.  

The last year has been the most difficult time for Scottish pig producers in living memory with producers battling to run viable businesses on the back of losses as a result of Covid-19 and the loss of the Chinese market, in addition to serious disruption within the supply chain, Brexit impacts on the availability of labour and the war in the Ukraine causing unprecedented rises in material costs.  With the balance sheets of pig business across the country being seriously damaged, the current situation is testing even the most robust in the sector and many small to medium sized producers have already had to close their farms down.

In May, the Union wrote to Scottish Government outlining just how exposed the Scottish pig sector is and proposed an ‘on-goers scheme’ that would provide small to medium producers a lifeline by enabling them to restructure their multiple existing borrowings into a single long-term loan scheme and in turn provide security and confidence for them to continue to produce and weather what can only be described as the ‘perfect storm’.  To date, the Union has had no response to its proposal.

Robin Traquair, NFU Scotland Vice-President and Midlothian pig farmer, explained, “We’re hugely disappointed that we’ve had no response, discussion or counter proposal from Scottish Government to the proposed ‘on-goers scheme.’  

“On a weekly basis we are seeing more and more pig farmers leave the sector unable to sustain the costs of production and investment.  It won’t be long before we have no pig industry in Scotland – an industry which is worth £110 million to the economy and provides high-quality food for the nation.

“The proposed scheme would operate with the bank; all debt would be lumped into one long-term borrowing between 10 and 20 years at a favourable rate and incur no set up fees plus an initial repayment holiday for one year.  This would provide that vital assurance to those who are at the point of selling up to keep producing, reduce costs and have the confidence to invest in their businesses, including spending on farm improvements to meet future environment and welfare requirements.  

“It can’t be used to pay off existing debt but does provide both borrower and lender with a long-term strategy.

“My own business has suffered, and I’ve already had to cut my stock by nearly half in a bid to stay afloat and I would welcome such a scheme.  

“As a Union, we recognised and welcomed the positive response of Scottish Government in funding three tranches of the invaluable pig hardship fund that addressed loses directly linked to Covid-19 pandemic for those supplying the Brechin abattoir, but there is an urgent need to address the wider and deeper-rooted problems the sector is experiencing now.
 
“We believe this could be the solution but need Scottish Government support in establishing it.”  

Notes to Editors:

An ’on-goers scheme’ would provide a means for small-medium producers to restructure the multiple existing borrowings into a single long-term loan Scheme based on the following structure:

  • Farmer and their commercial banker agree value and term of the loan (between 10-20yrs)
  • Repayment holiday for Year 1
  • No set-up fees  
  • Interest rate set at zero percent for first five years after the repayment holiday
  • For remainder of the term of the loan thereafter, interest rate reduced by five percent should the base rate go above five percent

Role of Banks

  • Bank provides the funds to the client
  • Bank to certify that the pig farming client was a viable business prior to the current crisis 
  • Bank to certify their willingness to continue support for that business going forward

Role of Government

  • Receive assurances from the bank as to the past and future business
  • Assist banks with shortfall in interest and set-up fee


Ends

Contact Diana McGowan on 07920 018619

Author: Diana McGowan

Date Published:

News Article No.: 69/22


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