SCOTLAND'S PIG sector is in imminent danger of losing the 'critical mass' it needs to remain viable – and the blame is being laid squarely at the door of the United States-owned 'processing partner' of the industry's keystone abattoir at Brechin.
Pilgrim's UK, a subsidiary of global pig and poultry giant Pilgrim's, stands accused of an 'abuse of power', pushing down its price to the point that Scottish producers are reportedly leaving the sector at the rate of one a week.
NFU Scotland this week wrote to the company asking it to review its pricing policies before the sector is fatally damaged.
The Brechin plant has been the focus of Scottish pig sector hopes since its revival as a pig-focussed facility under the auspices of Quality Pork Ltd in 2016, with producers responding positively to the opportunity and lots of good work being done to increase the market share of Scottish-sourced pigmeat.
But the seeds of the current crisis were sown back then, when QPL enabled Brechin's revival by partnering with Dutch pigmeat giant Tulip. That company has since been subsumed into Pilgrim's, and QPL now finds itself at the mercy of the strong-arm pricing tactics of American business.
When Brechin was temporarily closed earlier this year due to a coronavirus outbreak in its staff, it lost its export licence to China – buyer of around 25% of its output – and in the current melee of world politics, there seems no urgency to have that licence renewed.
On reopening, Pilgrim's response to the lost business was to knock £15 off the price of every pig, despite official industry figures at that time already pointing to a 35 pence per kilo shortfall between producer returns and cost of production. Howls of protest from producers persuaded Pilgrim's to later reduce this deduction to £7.50 per pig, but that 'split the difference' figure has done nothing to convince producers that the company's calculations are anything other than an opportunistic exploitation of difficult circumstances.
"It's a disgrace – it's an abuse of power," said one pig producer, who asked to remain anonymous. "Pilgrim's know there are producers in the north who really struggle to send their pigs anywhere else. They need Brechin for their survival, so Pilgrim's can say 'this is the price, or don't send your pigs here'.
"The first folk to go were those buying in weaners and finishing them at 10 weeks, because they could respond to that, and step off the prodiction cycle fast," he added, "but now its the sow producers looking to get out. Whe sow capacity starts to go, you can't get that back."
In his letter to Pilgrim's, NFUS president Martin Kennedy urged the company to stop operating pricing practices that threaten the survival of the Scottish pig sector.
“NFUS has some serious concerns for the future of the pig sector in Scotland resulting from the uncompetitive price being paid by Pilgrim’s for pigs going to the Brechin abattoir.
“The price is uncompetitive compared to alternative market routes and this has resulted in the volume of pigs going to Brechin falling dramatically and operations at the plant being reduced to three days a week.
“While there is strong market demand for pig meat the pricing structure being operated by Pilgrim’s at Brechin is making it impossible for many of our members to financially survive,” he said. “We are currently losing around one farmer from the sector each week and to stop the trickle becoming a flood, we need Brechin to once again be operating at normal levels and paying the same price as other abattoirs.
“Should the current situation persist we are concerned for the future of the abattoir itself as to operate effectively it needs a critical mass of pigs to process efficiently – we simply won’t have enough pigs left in Scotland to meet this critical mass if the current situation persists,” warned Mr Kennedy. “This could threaten both farm jobs as well as those working at the abattoir, and result in a shortage of ‘Specially Selected Pork’ on shelves.
“We are calling on Pilgrim’s to recognise their responsibility to the pig industry and cease penalising farmers through unfair pricing. If they are not willing to review their current practices then we urge them to engage in meaningful dialogue that will open opportunities to develop a positive future for both the sector and processing plant.”
A spokesperson for Pilgrim’s UK said: “We are pleased the NFUS shares our concerns about the current challenges facing the Scottish pig industry and would welcome its support. The Ulster Farmers Union worked successfully with the pig sector in Northern Ireland to establish a government-backed financial support package that has provided an ongoing lifeline for processors and farmers, following the loss of China export licences due to Covid.
“A similar package was initially provided by the Scottish Government but expired at the end of March. Together with Quality Meat Scotland and the Scottish Association of Meat Wholesalers, we have made representations to the Scottish Government to call on officials to extend this vital support and we are asking NFUS to lend their voice too," said Pilgrim's.
“The voluntary surrender of the China export licence by Quality Pork Processors' Limited (QPL) for the Brechin plant, under the guidance of DEFRA at the start of this year, has unfortunately had a devastating financial impact. The processing of pigs at the site is loss making and Pilgrim’s UK has continued to share the burden of these losses with farmers since May.
“We are calling for immediate intervention from the Scottish Government, to reinstate its support package, and we will continue to do everything we can to put the Scottish pig sector into a more sustainable position. A vital part of this is the reinstatement of the Brechin site’s China licence and we are doing everything we can alongside our partners to raise the importance of this via DEFRA and other government departments.”
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