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2. Win some, lose some....

Many British pig producers have also been producing at a loss for much of 2015, and domestic consumption of pork, bacon and sausages has been on a downward trend in recent months. This has encouraged the National Pig Association to run a Christmas Gammon Watch campaign to encourage stocking of British gammon at this peak sales period. A recent study by AHDB Pork showed that increased exports of pig meat in recent years have occurred at the expense of the British producers’ share of their domestic market.

Pig prices in the UK have come under renewed pressure since October. Figures from the AHDB show that market prices have been below the average cost of production during the last three quarters. While historically low feed prices have acted as a brake on overall costs of production, the downward drift of prices throughout 2015 have pushed many pig producers into a loss-making position.

 
Prices below cost of production during 2015

Declining consumption

All the main pig meat categories performed strongly during the early years of the economic downturn, as pig meat was more competitively priced against the other meat species. According to data from Kantar Worldpanel, this trend has been reversed more recently. Purchases of pork, bacon and sausages declined in the latest quarter. Worryingly there were declines in both the volume and value of sales and lower retail prices have not acted as a stimulus to higher sales. As industry analysts are busily analysing the latest trends, it is worth considering whether changing retail promotion strategies with less emphasis on deep cut price promotions in favour of ‘Every Day Low Prices’ (EDLP) may be a factor. There is also clear evidence that reducing ‘food waste’ is becoming a more important issue for many households in order to economise on weekly food shopping bills – and we don’t need Albert Einstein to tell us that less food wasted soon translates into less food purchased in the first place.

 

 
Less pork, bacon and sausages purchased in 2015

Christmas Gammon Watch

Against this difficult market background, it was little surprise to see the National Pig Association (NPA) back on the campaign trail in recent weeks. The NPA will be adding a 'Christmas Gammon Watch' to their bi-monthly Pork Watch survey in the run-up to Christmas.

December is the key selling period for gammon and the NPA will be seeking to ‘name and shame’ retailers who do not demonstrate strong support for ‘British’ gammon in the run-up to Christmas. Their observations to date are that, apart from the ‘100% British’ retailers (Waitrose and Marks & Spencer) and the Co-op (81%), the presence of British gammon in the rest of the retail trade was fairly patchy.

 

 
Wot no British?

Carcase balance

While NPA frustration at the lack of ‘British’ gammon on retailers’ shelves is understandable, the realities of the issue of ‘carcase balance’ for the UK market have to be recognised. A recent report by AHDB Pork (‘Carcase balance limiting UK pig meat’s market share’) highlighted that, while the overall UK self sufficiency in pig meat has risen from 47% to 55% in the last ten years, the UK share of the domestic pig meat market has remained stubbornly at around 40%. While production of pig meat has recovered in recent years, exports have grown strongly and now account for over 20% of pig meat produced in the UK.

 

 
Growing export trade

 

Because of UK consumers’ fondness for products from the loin or leg, domestic production would need to more than double from 10m to over 20m pigs to satisfy that requirement from local sources. Conversely, we could supply the current demand for products from the shoulder and belly by halving current production from around 10m to 5m pigs. The recent AHDB campaign for Pulled Pork was an initiative to start addressing the long term ‘carcase balance’ within the UK pig meat market.

 

 
Carcase imbalance?