UK: Increasing pork prices now could save farmers

23-10-2012 | | |
BPEX: Higher pork prices in 2013, increased prices now can help
BPEX: Higher pork prices in 2013, increased prices now can help

Shoppers could be forced to fork out up to €0.70 cents (60p) more for a packet of eight sausages, €0.86 cents (70p) more for a standard pack of bacon or a whopping €3.07 (£2.50) extra for a pork roasting joint within months, if mounting losses force more pig farmers out of business.

But small increases now in the price shoppers pay for bacon, sausages and ham will keep farmers in business and stave off these massive price increases according to a report out. The report from BPEX shows how modest retail price rises of as little as €0.8 – €0.17 cents (7-14p) on a pack of bacon today could keep responsible pig farmers who meet Red Tractor Assurance standards in business and avoid bigger price hikes for shoppers in the future.

Consumer research also published by BPEX suggests that consumers would be supportive of modest price rises with nearly two-thirds of people (63%) agreeing, when told about the current problems facing pig farmers, that it is right for shoppers to pay a little more for responsibly produced food  if farmers’ costs have increased due to circumstances that are outside of their control.

Crop production around the world has been significantly affected by drought, driving up the cost of pig feed. Typically feed makes up 60-70% of pig farmers’ costs, but dramatic price increases in the past months mean that pig farmers’ cost of production has soared to €2 (£1.70) per kilo. With the current price paid to farmers around €1.90 (£1.55) per kilo they are currently losing around €17 (£14) per pig reared. 

Without a price increase losses for the industry are set to hit £100 million over the next six months with many farmers likely to be forced out of business.

Estimates from BPEX suggest that without price increases the pig herd in the UK and across Europe could be cut by 8-10% over the coming months as farmers cut back production or are forced out of business.  A recent reduction in herd size in Germany of 4% led to €0.31 cents (26p) price increase per kilo paid to farmers.  An 8% decrease could therefore lead to a price increase of around 50p per kilo.  When translated into retail prices this would mean  an increase of up to €1.70 (£1.40) on a pack of four pork chops, €3.07 (£2.50) on a leg roasting joint, 60p on a pack of sausages, €0.86 cents (70p) on a pack of bacon or €0.55 cents (45p) on a pack of sandwich ham.

BPEX’s report “The Impact of Feed Costs on the English Pig Industry” shows how a far more modest increase of €0.12 cents (10p) now would return pig farmers to break even.  This would result in an increase of just  €0.19 – €0.34 cents (16-28p) in the retail price of a pack of pork chops, €0.7- €0.14 cents (6-12p) on sausages and €0.8 – €0.17 cents (7-14p) on bacon. 

Research conducted by YouGov for BPEX suggests consumers appreciate the need for small price increases.  When told about the current problems facing pig farmers 63% of people agreed it was right that shoppers should pay a little more if farmers’ costs have gone up. 

When told about the standards of animal welfare, traceability and food safety under the Red Tractor scheme 55% of consumers said they would be prepared to pay a little more for pork, bacon or sausages produced responsibly by farmers who meet standards such as Red Tractor. 69% agreed that Supermarkets should continue to support Red Tractor pig farmers and resist switching to supplies of cheaper imports which could be produced to lower standards.  And 68 per cent of people also agreed that supermarkets should pay a little more for pork, bacon, sausages and ham to help Red Tractor pig farmers through the current crisis.

Andrew Knowles of BPEX says: “Cost of production has soared due to big increases in feed cost and yet again pig farmers are facing big losses. But a relatively modest increase of just a few pence now on the retail price would cut farmers’ losses and prevent massive increases to shoppers next year if pig production drops.”

“Its’ a difficult time to be talking about price increases with many consumers feeling the squeeze, which is why it’s so gratifying to see that consumers appreciate the need for small price increases and the majority are happy to pay a little bit more for pork, bacon and ham, produced responsibly  by Red Tractor farmers.”