Cutting costs the priority
risingcosts of production in Europe are being matched by rises in
Great Britain. The association believes cutting costs is vital to
remain competitive, writes Anthony Fletcher.
The report, entitled Pig Cost of Production in Selected EU Countries, shows production costs in the rest of Europe have risen by 10p per kg since 2000 but that costs in Great Britain are still 11p per kg above this level. The prices producers in Great Britain are paid are running below the costs of production, but this scenario is echoed through Europe.
"The two major factors pushing our costs up are daily liveweight gain performance, 635g per day against the EU average of 759g and piglets raised per sow per year, 18.22 against 21.06," said report author Andrew Knowles, BPEX strategy co-ordinator.
"However, both these are being tackled as part of the five-year BPEX Road to Recovery strategy which aims to reduce costs of production in Great Britain by 15p per kilo.
"Work at the Stotfold Pig Development Unit is very encouraging with initial results from the liquid feeding trials and the finishing systems project showing substantial improvements in daily liveweight gains."
BPEX has also launched its pig health and welfare strategy. The association believes that an improvement in herd health nationally should translate into a higher number of piglets finished per sow.
"Many of the issues highlighted in the report are still with us today and some have become even more important, though the gap between GB and the rest of Europe has closed a little," said Knowles.
But some pig producers in the UK are concerned that lower food prices pledged by major supermarkets will drag the UK industry back into trouble. A supply glut of pork coupled with prices rises has led the European Commission to end temporary export subsidies.
Pork processors are worried that this drive to reduce food prices further could reverse the recent upturn in the industry. According to Farmers weekly, the farm to retail price spread has dropped from 284 per cent to 271 per cent for fresh pork over the past six months, while the bacon spread has narrowed from 374 per cent to 335 per cent over the same period.
This, says the publication, has been caused by higher producer returns rather than price cuts at point of sale. But the pork industry is concerned that further cuts in retail margins may lead to increased imports. The Meat and Livestock Commission has calculated that the UK is now only 47 per cent self-sufficient in pig meat.
However, BPEX says that some things have changed in the UK's favour recently. Better exchange rate movements and feed price rises have hit much of Europe, especially the south, much harder than in the UK.
The report, which looks at the position in 2002 is an updated version of an earlier study that looked at Britain's competitive situation in 2000. BPEX says that the new report is an essential tool in helping identify opportunities to improve the industry's competitive position.
