FEED SURVEY, MAY 2008
Feed Survey Results
(From Pig World, June 2008)
In Britain, producers have generally been comfortable, since Pig Fair in May, that the pig price will continue to rise.
But they are not confident enough to lock into feed contracts, even though compounders are urging their customers to at least take cover on a percentage of their feed.
Around 80 percent of producers would normally have locked into 100 percent of their feed requirements for next year by now, but according to leading compounders so far only 20 percent have locked in, and only for about 20 percent.
General advice from compounders is that whilst the wheat market continues volatile the chances of buying 100 percent of requirements in one go and getting it right are remote, so spread your buying decisions.
Producers should lock into 20-25pc now — perhaps covering a specific diet — and aim to have up to 50pc cover in place for January-September by harvest.
Producers should also be thinking about buying soya sooner rather than later.
Evidence that pig producers are simply not prepared to lock into loss-making prices comes in a survey by NPA for the Pigs Are Worth It Campaign.
The survey (held Thursday May 22 to Wednesday May 28) received responses representing five percent of the England and Scotland pig herd. They show the pig price must increase to 150p a kilo, or more, before the majority will consider entering into new feed contracts.
Key points
Over 60 percent of professional pig farmers are considering quitting the industry. Fifty-three percent specifically say they will quit pigs when their current feed contracts run out, if feed prices and the pig price remain at current levels.
Most feed contracts start expiring from this June onwards. The average wheat price at which producers would take cover is £124 a tonne, with the majority of respondents in the survey stating £120-£130 a tonne.
Feed prices currently being paid by pig-keepers cover a wide range, with breeder diets averaging £176, rearer diets averaging £225 and finisher diets averaging £197.
Most existing feed contracts will expire late summer through early autumn.
To be persuaded to stay in pigs, producers need to see 140p-200p, the survey average being 153p.
Eleven of the 19 producers who expressed a view said they needed 150p or more to be persuaded to stay in production.
Spreading risk
43pc spread their feed purchasing through the year to reduce risk.
39pc buy now for future delivery.
10pc buy through a group.
8pc buy on raw-material-plus agreements.
Looking to the future, 45pc will use a risk-spreading mechanism, but only one respondent is considering Options.
Taking cover
Of those taking part in the survey only two have taken cover, one for 80pc, one for 10pc.
65pc would normally have taken at least 40pc cover by this time (but some respondents may have given a month rather than a percentage figure in the survey, so the actual figure may be higher).
Of the 65pc of respondents who expressed a view, the average feed wheat price they would take cover at is £124, the most poplar range being £120-£130.
Survey comments
• Being heavily invested it is incredibly difficult to leave the industry. Pig buildings are pretty useless for anything else.
• If we can continue to source alternative sow feeds ie. potatoes we will continue, possibly selling weaners, but finished pig prices must continue to climb if we are to carry on selling finished pigs.
• I usually decide on feed contracts around harvest. 145p will not fill in the hole. As for reinvestment, no chance. Repairs at present are baler-twine based!
• Already cut herd from 320 sows WILL NOT continue with idle promises, even though wheat is falling I suspect final feed prices will not come down in relation, they have plenty of excuses some genuine! I echo the baler twine comment.
• I am 60 in July and could retire comfortably. I cannot afford to jeopardise that position. I have two employees with 28 and 40 years service. I fear for their future even with substantial redundancy payments earmarked.
• I see the next three months as critical. The current straights prices, without a serious jump in finisher prices, would lead to huge losses.
• If the pig price continues to rise and wheat and soya, plus minerals etc, drop a bit I might stay in and struggle on. Arable farming looks okay but the oil price is really starting to hurt. My combine uses £5 of diesel per acre at 70p and it may be £1 at harvest. With fertiliser prices at £500 for PK compounds, I reckon my pig muck is worth £40 an acre. I lost money in 2008 but it may be worthwhile sustaining a loss in the short term to make gains in the longer term.
• Tell the retailers and processors to give us a ring and I can explain in simple terms that even they can work out that if our pigs are worth less than the cost of feed then we cannot go on for long...
• For those with arable as well, with the forecast for nitrogen and diesel where they are, cereals around £120 a tonne won't be any more profitable than they were at £80 or £90 when inputs were cheaper. Pigs might not look so daft after all if the price goes up. Here's hoping!
• With hi-pro bought and 100pc of wheat and barley about to be harvested, prices worldwide will go up to save our bacon! Or - as they say - WE ARE ALL DOOMED.
• Difficult to make clear the patchy nature of forward bought stuff compared with historic across the board forward buying. More exposed than ever now because of the volatility. Because the swings are so great the gains/losses can be so much greater than ever before.
• With NVZ regs on the horizon I will not spend for slurry storage unless I can see a clear return. So ergo, no pigs.
• I have to think twice before I buy a bag of cement or a box of welding rods. Bale string is cheaper. What a state to be in! My grandfather used to be a bale string farmer (progress).
• The feed contract I took out on January 1, 2008, for nine months, was based on wheat prices of £185. I have just had a quote from October based on a wheat price post harvest of £135, yet the feed price has not dropped and the weaner ration has even increased.
l NPA Trade Directory l Mechanical data l National Pig Association l Defra l BBC weather l
l Environment Agency l Food Standards Agency l Quality Meat Scotland l Scottish Executive l
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