Organisations representing UK pig producers have called on Europe to consider more transparent pricing mechanisms and more robust contractual requirements to support the hard-pressed sector.

In a letter to European Commissioners, the organisations highlight the progress made in addressing issues within the dairy sector at an EU level as a potential model to deliver a more sustainable and balanced pigmeat supply chain.

The letter to the Commissioners, signed by representatives of NFU Scotland, the Ulster Farmers’ Union and the National Pig Association states:

“Agriculture within Europe has already had to absorb the initial shocks of increased costs within the livestock sector without significant recompense from the market.   No sector is more vulnerable to input feed costs than pig production.

“The EU has reviewed the operation of the milk market in Europe and intervened with new contractual standards and vehicles to empower producers.   It is now imperative that a similar initiative is fast-tracked to underpin the EU pig sector.  

“The extreme cost pressure both on energy and protein feed sources challenges EU pig production as – from January 1, 2013 - we move into an era of high welfare standards driven by the European stalls and tethers ban.   That animal welfare legislation has required significant investment on many farms and creates a cost base above those of competitors outside the EU.  

“In the present economic climate, producers face a perfect storm of cost escalation with no shelter from the competition of lower welfare systems and no significant support from the market.   In recent weeks, in all parts of the United Kingdom, we have already lost producers and capacity in an industry that has, for many years, operated high welfare production systems.

“Pig production has always been exposed to market forces with many producers now utilising their own cereal resources or fixing costs through forward buying and contracts to smooth the effect of commodity movements on the production enterprise.  

“That approach is becoming less viable as climate change drives extreme volatility in basic feed prices, and markets for pig meat are dominated by major retailers with the ability to control the market price at levels which are unsustainable.

“The market has failed to react to the real costs of production over a prolonged period.   It is essential that transparent price reporting is in place throughout Europe and bolt-on premia are not sheltered from the reporting mechanism.   Maintaining an artificially low reporting price level is one factor that can stall the positive price movements that support production and provide a sustainable economic environment on farm.

“Clearly as a higher percentage of groceries are channelled through the large multiple retailers, a small number of buyers control a significant percentage of product on any Member State’s market.   It is now essential that there are options for producers supplying the larger buyers or processors.   It is not acceptable that animals are traded on a weekly offer price alone; there should be an option to supply through a contract, the price being defined by an agreed transparent pricing mechanism.

“Agreed pricing mechanisms can also be subject to a multiplier when key inputs rise.    This form of sustainability coefficient might be triggered at certain price thresholds as agreed by producer groups and processors.   However, the EU should investigate the viability of such an approach, overseen by a trade regulator when feed prices shift significantly and the market fails to respond.

“This is a complex area but it is crucial for EU consumers and producers that a sustainable framework is put in place to support the production of high welfare pig meat within the Union.   Food security imperatives and food quality standards must mean that European pig meat is available through our retail network.”

Notes to Editors

• The letter was sent to Europe’s Agriculture Commissioner, Dacian Ciolos; Commissioner for Trade, Karel de Gucht and Commissioner for Health and Consumer Policy, John Dalli.  It was signed by NFU Scotland President Nigel Miller; National Pig Association Chairman, Richard Longthorp and Ulster Farmers’ Union President, Harry Sinclair.
• A copy of the letter is available on request.

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Contact Bob Carruth on 0131 472 4006