It's getting harder to bring home the bacon

Published on Thursday 14 February 2008 23:08

THE Scottish pig sector is in serious trouble and, unless prices improve markedly in the very near future, there is a real danger of a meltdown.

In the mid-1990s there were 70,000 breeding sows in Scotland. The total is now down to little more than 45,000 animals. Costs have shot up while ex-farm prices have barely moved.

Jimmy Traquair runs just over 300 sows at Wellington Farm, near Dalkeith, with his son, Robin, who is chairman of the NFU Scotland pig committee. He claims he has never experienced a situation like the current depression in more than 30 years of farming and would not be surprised if Scotland was to lose 20 per cent of its breeding herd in a relatively short period.

He said: "It's intolerable and some people will undoubtedly pack it in before much longer. There are others who will struggle on because they grow their own barley and hope matters (will] improve."

However, the Traquair family only owns 12 acres and have to buy about 100 tonnes of barley a month. The latest load came in at 174 per tonne delivered, more than double the 80 the business was paying this time last year.

At the same time, arable farmers who sell grain to pig producers are reported to be increasingly anxious as to whether they will be paid. There are, as yet, no reports of any pig producers going bust, but several are teetering on the brink in the face of losses of as much as 20 on each animal sent for slaughter.

Traquair said: "We are surviving, but only just. The problem is the price we are receiving. It's around 112p per kilo, but the reality is we need between 20p and 30p more to make a profit and allow for reinvestment.

"Ideally, we would like to have a cost-plus contract, but the supermarkets don't seem interested in that sort of deal, saying if there is not enough home-produced pork and bacon they will just import from elsewhere in Europe, where pigs are frequently reared under conditions banned in the UK."

The latest survey of compound feed costs by the Meat and Livestock Commission (MLC) clearly illustrates the pressure producers are under, with a rearing ration that cost 229 per tonne in January 2007 now coming in at 283 per tonne. That price would probably have been higher but for the fact that most feed manufacturers bought grain and protein on forward contracts at a time when cereals were lower.

UK producers are near the top of the EU price league, but values are still 7.5 per cent lower on the year when calculated in euros. The downturn in the fortunes of producers is widespread through much of Europe, with bacon pigs in Denmark down by 3.5 per cent compared to last January, while weaners in the Netherlands are reported to be 44 per cent cheaper. Finishers simply cannot afford to pay more in the face of the huge rise in feed costs.

But the most frightening statistics concern the difference between the price the farmer receives and the average at the supermarket checkout. For every 1 spent on pork the farmer gets 35.5p. The bacon situation is worse with just 28p coming back to the producer.

The irony is that demand for pork is rising rapidly. Japan, one of the largest importers, last year imported 760,400 tonnes of pork, of which 161,000 tonnes was sourced in Denmark.