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Rising feed costs need recognition at the retail end

by 5m Editor
17 July 2007, at 6:48am

UK - With the cereal sector benefiting from a much-needed and justified rise in prices, pig and poultry producers are struggling with associated rises in feed costs - and they aren’t being reflected in the market price, says NFU Scotland.

The cost of pig production has risen by around 11 pence per kilogram (p/kg) compared to this time last year. However, the prices paid to farmers have risen by only around 3 pence and there are even signs of pressure on that from retailers. The spot price for pigs has reduced by 4 p/kg in the last fortnight.

As a result, NFUS is writing to all the major supermarkets to make them aware of the pressure being felt at the farmgate.

Robin Traquair,Chairman of NFU Scotland’s Pig and Poultry Committee and a pig producer from Midlothian, said that pig farmers are hugely concerned at the rising cost of grain for feed.

"The same is true across the poultrymeat and egg sectors. No-one begrudges cereal producers getting a much-needed rise in their prices, but our biggest customers need to recognise that it has a major impact on our costs of production, which has gone up dramatically."

He said that the cost of production on his unit will now be around 110p/kg, yet the market price for pigmeat was currently below that. "This means that I’m not even breaking even at the moment, let alone making money to reinvest in the business. The drop in the spot price this month has fuelled industry concerns," he added.

The major supermarkets are not the only market for pig meat, but they are the most influential. Mr Traquair wants them to understand that thier strong messages of quality food is supported by suppliers, but for them to recognise that the cost of production has risen sharply and ease the pressure at the farm gate.

Chairman of the NFUS North East region Philip Sleigh, is also a pig producer. He said that although there had been a lot of news headlines over the last few days about price increases on bread, because wheat prices have risen, there had been little recognition of the impact increased grain prices will have on meat and dairy products.

"I’m also having to spend significant extra money myself because the price of grain for feed has risen sharply – I am spending between £4500 and £5000 extra per month, but, there is no recognition of that in the price I’m being paid for my pigs," he explained.

He said that the supermarkets have to be aware of the pressure being felt on farmers and processors and the farming industry needed to strengthen its message to them.

"In short, the big retailers need to pay more for Scottish pig and poultry products and certainly not make farmers the victim of either rising feed costs or high street price wars. We also shouldn’t presume that shoppers should always have to pay more – supermarkets could simply make a small dent in their very large margins,” he said.

5m Editor