With feed prices rising, pig meat producers in the UK coming off contracts could be facing, on average, an extra Â£12 a metric ton to renew.
This equates to as much as 4p per kg deadweight according to a feed cost report just published by the British Pig Executive (BPEX).
BPEX said there is a whole range of factors driving the price increases for cereals, including the drought affecting EU production, low cereal stock levels, fears about new importers and the rise in interest in biofuels.
Competition of biofuels In the UK, for example, a biofuel plant is under construction which will take 750,000 metric tons of wheat a year. Report author Tony Fowler, BPEX Senior Economic Analyst, said: “Biofuels are being promoted by governments around the world as a sustainable energy source. The downside of this is that as they compete with animals and humans for feed, prices will be driven up.”
Further rise in prices Prices are set to show some further rises through the remainder of the current season, which will push up pig production costs. “But more plentiful EU supplies combined with adequate sources in the Ukraine and North America and lower soya prices should mean that prices are unlikely to approach the high levels of 2003/04,” said BPEX KT Manager Richard Bull. “However continuing uncertainty over the southern hemisphere harvests is likely to lead to some volatility in cereal prices over the next few months,” according to Bull.