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Industries stand together to call for farm gate price rise

by 5m Editor
4 September 2007, at 9:56am

UK - The NFU and the National Pig Association are joining forces to campaign for sustainable prices for pig and poultry farmers. Both organisations are hosting a press conference in London tomorrow to warn of the consequences for supplies of pork, bacon, poultry meat and eggs if farm-gate prices do not rise to match a steep increase in feed costs.

The pig sector is at crisis point and losing £3.9m per week due to increased feed costs alone. However, a rise of 7 pence, to just 17 pence more per retail pack for pork and 12 to15p/kilo for poultry or per dozen eggs, at the farm-gate could secure UK producers' future – and more importantly, safeguard both industries from inevitable bankruptcy.

For pig production around half of the production costs are taken up by feed. With a current average price for pork at £1.09 per kilo, most producers are losing £26 per finished pig, which is not sustainable.

Further leaps are expected in feed prices, particularly in the poultry sector. Forecasters predict rises of 30 to 40 per cent this autumn, which could see tonnage costs rise from £180 to £230/tonne. Producers will go out of business unless there is some change in pricing - and fast.

NPA chairman Stewart Houston said that wheat prices have rocketed world wide and many pig producers, who were already struggling to cope with legislation-driven investment pressures, are now desperate.

"These businesses are unsupported. They are well run and managed to very high welfare standards and they are under threat. A modest rise of 7p to 17p per pack of pork or pork products is all it would take to move the industry back from breaking-point. But we need this action now, in days, not weeks," he stressed.

Serious risks
Charles Bourns of the poultry board said that there is now a serious risk that public limited poultry companies may not be able to continue operating - the rise in feed costs will put significant pressure on short-term cash flows.

"We have seen dramatic feed increases in recent weeks. This has happened before and we had a price increase to producers from the supply chain. The problem this time, is that some supermarkets are engaged in a price war and there are real concerns that the natural market rise expected at the farm-gate is just not going to happen."

Both leaders firmly believe an increase in the price paid to farmers is the only way to prevent a livestock industry meltdown. The immense losses being seen in these sectors stems from escalating cereal markets and so vast increases to feed prices.

Price wars to blame
NFU President Peter Kendall said that many foods have become embroiled in supermarket price wars. For example, Asda promoted and sold chickens at £2 last year - which is clearly unsustainable.

"It sends completely the wrong message. However, things are changing with Tesco this week announcing its plans to sell the same size bird for £3.39 – a rise of four per cent which is good news," he explained.

He is urging buyers and processors to pass this benefit back through the supply chain and to struggling farmers. "Soaring feed costs are a global phenomenon, as wheat is traded on the world market, so importing chicken and pork from abroad is not the answer. The era of cheap food is coming, and must come, to an end," he stressed.

5m Editor