355

RECENT DEVELOPMENTS I N MEAT MARKETING

W. S. BOLITHO,

T. Wall d Sons (Meat and Handy Foods) Ltd., London

In the knowledge that I am privileged to talk to experts, I ask your indulgence in basing most of my paper on my experience with pigs. I would, however, also like to mention beef and lamb for we have recently started a pilot scheme on fresh meat and have a little experience.

Basically, we have I think as our main consideration the most topical subject in agriculture in this, or any other time-marketing. In this context, I have taken marketing to include the production of the live animal on the farm, its sale, its subsequent handling as a raw material, and its final disposal as a product in the shop.

I do not want to waste time on consideration of pre-war conditions. Times have changed and in general it is fair to say that the farmer and his customer, the consumer, are relatively prosperous.

Meat was decontrolled in 1954-just ten years ago. After 15 years of control, the farmer had little or no experience of his customers' requirements, all his production was readily sold irrespective of quality. The processor (the man who turned the very raw material into a saleable product) had no idea of cost but was only interested in quality. The consumer had no experience of selection or even choice.

Auction markets were in their hey-day. Contracts were a relic of the 1930's and demand exceeded supply in every respect. Subsidies were high and the economic facts of life were accordingly hidden.

Against this background, my Company had to take some very important decisions-which I believe in hindsight have proved correct, and have provided a very firm foundation for our present position.

The position as we saw it in 1954 offered a very great challenge. Develop- ments would take place and, from a commercial viewpoint, it was essential that we should place ourselves in the van.

We were large Wiltshire bacon curers and large manufacturers of pig meat; we felt that there were three main spheres of development.

Firstly, the consumer. Freed from rationing, with more money. More housewives at work, with less time to shop, less time to prepare and cook food, less willing to accept the cheapest and often unattractive cuts. More impatient with queues, more demanding, looking for a standard branded product, pre- packaged, in a convenient form in a convenient shop.

Secondly, the processor. Forced to meet the changing consumer pattern by producing what was required. Forced to look at raw material against satisfaction of consumer demand. Forced to look at cost-cost of raw material, cost of processing, and the sharp competitive cost of his product in the shop.

Thirdly, the producer. Forced to face competition from abroad and a changing market scene.

3% W . S . Holitho

The three main spheres of development I have mentioned appeared on the surface to have no real connection.

This was our greatest problem-to develop a very real relationship between the three vital interests.

Wc therefore approached this problem in what I believe was R logiral way, and this holds even more strongly today. We had to carry out consumer market research to find out what the consumer wanted. This involved the commercial utilisation of animals produced in different ways at different weight ranges and assessing consumer reaction to the products and joints to provide a test of consumer acceptability. This had to he done on the total range of the animals produced, not just a selected proportion involving the best only.

Next we had to establish the economics of producing the animal on the farm, and then by a detailed carcase dissection to evaluate the cost of prntlucing a pound of lean meat.

These studies took three years to carry out and brought us farc to face- for the first time in 17 years-with the producer. To meet the demand which we had found for our products, it was essential to obtain a regular supply of raw material. Our maxim then, and this still is applicable today, was “the supply of the right number of pigs, at the right time and at the right price”.

We appointed a solitary Field Officer-in this case a practical farmer- to brave the first producer. Let us try to imagine the scene because, apart from refinements which have been added over the years, the same scene occtirs still.

The Field Officer had made an appointment with a whey feeder in Somerset, and duly arrived in a small car (not a result of market research hut pure economics).

The Field Officer was armed with a pamphlet which covered the salient points. Walls wanted pigs between 8$ and 11 score deadweight. The pigs were required on a regular basis and a contract was available (to be produced a little later in the conversation). The price would ensure a fair return com- pared to other markets. The pamphlet covered the essential features in the cost of production compared to haconers, spread of weaner costs, better killing out percentage, cheaper rations and ad lib. feeding. The producer would pay the haulage cost but Walls would arrange the haulage. Now the contract was produced. This was greeted a t first with more astonishment than interest. The year WRS 1956. The contract was signed and that same producer is still producing heavy pigs today-for Walls-and has increased his production by 5 0 per cent .

Other reactions were not always the same. Contracts were considered alm‘nst anachronisms. Within two years we were obtaining cic) per rent of our pigs on contract and from 1959 onwards, 75 per cent.

Gradually we achieved success in overcoming the greatest hurdle-breaking clown the barrier between the farmer and the processor. There was no magic formula then nor is there one today. I t requires a great deal of experience, building up confidence by providing a fair return, by exchanging information on profitability and development, and above all by consistent fair treatment, which can be seen to apply to all producers-big and small.

By this method of contracting for a year ahead, we were ahlc to secure regular supplies, Naturally, this was only a beginning and within the rontrart system there was R real need for further development. We started with R fixed price, contract whereby the producer was guaranteed a floor price. If the annual average of our weekly prices, determined by the overall levels of

Reccrlt Dez~ctnpii~tcri~s in Mcnt Markchrg 357

pig prices, was higher than the floor price, the producer was paid the difference in a lump sum at the end of the contract. If it was lower, the producer benefited. There was the very obvious snag in that it is impossible a year ahcad to pitch tlie guaranteed price at the right level and this type of contract was gradually replaced by an average price contract. In this contract the year is divided into periods of four weeks and the price paid in any period is the average of the four weekly prices in the preceding period. The advantage of this riiethod is the elimination of any weekly variations which thereby removes from tlie producers the need to play the market by advancing or retarding his deliveries. Ninety per cent of our contract pigs are now supplied against this type of contract.

The next development in contracting took place in 1960. We believed tlierre wiis a very real need to supply within the present price review structure, greater stability. Provided that performance on the farm remained reasonably constant, the rcal variable in production costs was the price of feed. Our Feed Price contract was accordingly designed against a rigid production performance and cost and this formula is adjusted each month on account of changes in the cost of ration constituents. A fixed profit margin is tlien added to the cost of production in order to determine the contract price in any period.

lliis type of contract has been well received. I t does present a very real risk in that, as you will appreciate, there is no correlation between the niarket price for pigs and cereal costs. Indeed, feed prices are norinally lowest when pig prices are highest and vice versa. However, I am confident tha t this type of contract is what is required-and I am very happy to state that we have not had a single example of this contract being dishonoured. Nevertheless, tlie risk is real as I know of no one who, for a year ahead, can accurately predict feed prices, nor-more importantly-pig prices.

I am sure you will accept, therefore, that our experience with contracts has been a happy one-and I genuinely believe that our producers would agree. At the end of each contract, the number of pigs not re-signed for the nest year has consistently averaged less than 2 per cent of the total contract supplies.

This situation has not been reached solely because of a fair contract, Initially a very real factor was the appointment of Field Officers in each area. whose dutv was tlie procurement of the pigs and all arrangements for tlicir collection from the farm and seeing that this was followed up by il prompt payment system and where all queries or enquiries were dealt with equally promptly and fairly. By this method, confidence was established and main- tained between the producer and the Field Officer.

The next stage was to apply further refinements. We knew that over ii four-week period, wc heid contracts for the supply of x thousand pigs. Our lactories required an even spread of these pigs in each of the four weeks. \Ve therefore evolved a forecast svstem whereby each and every producer on tlie Tuesday before each four-week period, forecasts for each of the following four weeks precisely how many pigs he will have ready for collection, and tlien fur a further four weeks ahead the total number he will have ready. Indeed, un one of our Areas we have run for six months a system whereby the producer forecasts ahead for eight individual weeks.

You will have realised that in this vast meat industry the balance betwecii over supply and under supply is very small-about plus or minus 3 per cent.

I expect my Field Staff to forecast supplies for each week of the ncs t four-week period within an accuracy of 2 per cent and as a result I get an accuracy of 3 per cent within each week equivalent to 1/3rd of a pig per

,.

358 W. S. Bolitho

producer per week. It is, therefore, in my experience, possible to get the farmer to forecast and to forecast accurately.

The situation I have portrayed may seem just too perfect. Even obtaining the accuracy I have mentioned in a very small proportion of the home meat industry, we can be horribly wrong. Our marketing department also has to forecast and it is a probability that when my department’s forecast of supplies is over-estimated, theirs is under-estimated and a 3 per cent error becomes 6 per cent. I will, if I may, here mention how, as a Company, we plan ahead.

In June of each year the Sales and Marketing Departments prepare their first cock-shy of the level of sales they anticipate achieving for each product in the following year. They will have taken into consideration the effect of the work of Product Development in maintaining and improving the quality and appearance of existing products, and in developing new products. They will also take into account the results of current market Research Tests and consumer sampling panels. They will also take account of shifts in consumer demand in the current year.

The figures produced are then given to Planning Department-which I believe has a smaller supply of rose-coloured spectacles. Here, the figures are subjected to the acid test of results over the years together with trends both long term and seasonal. Finally, the sales tonnages are translated into terms of pigs.

At this stage, the Accountants prepare an estimate of capital requirements and profitability. Our Board will then consider the outline plan and will make modifications. We are now into August. Sales figures are revised and the pig requirement is then re-assessed.

Production now look a t the new figures and, we would always believe that these wi l l mean increased production, consider their existing facilities and the new machinery that will be required, together with space and labour requirements.

It is here that the Pig Procurement get involved. The requirements have to be viewed against two main considerations:-

(a) wide differences between months cannot be accepted because pig

(b) producers cannot be expected to find another market for their pigs in

A balance is struck and the pig numbers are agreed. Accounts then present the Company plan in terms of capital and profitability and break this down by months and into Departmental costs.

The plan is agreed by the Board and at this stage all the Research and Development functions will be considered, together with an extension of the long-term plan.

From this stage, which is reached at the end of August, Field Staff are informed individually of the weekly level of supplies for the first six months of the next year, with a definite forewarning of supplies over the last six months.

Special plans will be laid to meet short-term increases over the summer months and these will be obtained by Field Staff by the end of February. That is the essence of the plan, which is then subject to commercial stresses.

Having decided the weight of pig we required, and having secured a regular supply, it was quite fundamental that we should carry out the research necessary into the raw material on the pig.

production is a long-term business;

certain months.

Recent Developments in Meat Marketing 359

There are three main fields for this research-Breeding, Feeding and Demonstration. It must be carried out under practicable conditions which will provide repeatability on the commercial farm. I t must also be balanced- in order that benefits gained are shared between the various interests.

On Breeding we have two separate centres. One centre concentrates on the progeny testing of boar stock for all economic factors-food conversion, lean content, and damming ability, and then by performance testing the boar’s offspring to allow producers to purchase boars which we are confident will perform well on their farms.

The other centre concentrates on the provision of female stock backed by five years’ research which, in 1966, will allow u s to make cross-bred gdts available to producers. Under a pilot scheme, eight of our producers are acting as multipliers of this female stock on their own units with their own capital.

On nutrition we carry out fundamental work at Colworth House, followed up by applied work at our own demonstration farms, and finally checked by field trials on our own producers’ farms so that we are in a position to recommend rations which are economic.

On Demonstration, we have three commercial farms-in Norfolk, in Dorset and in Derbyshire. Each of these farms concentrates on the type of feed which is available in that area. Converted buildings and new constructions are shown and fully costed and, in addition, the correct management is demonstrated under commercial conditions.

With these practical research tools, economic improvements can be obtained. There is a cake available-we want to keep the size of the cake but it must be shared equally between the breeder, the producer and the processor. If its division becomes unbalanced, the whole industry is affected.

I have tried to give you an insight into our Marketing Development and I believe it is fair to say that over the last six years the greatest development that has taken place in the pig industry has been the emergence of the heavy

In 1958 it was almost beyond the pale. Today it represents 20 per cent of pigs produced in England and Wales.

The development of the heavy pig symptomises what has been happening in Meat Marketing-and in this respect I think pigs are well ahead of beef and lamb.

In 1956, 33 per cent of all fat pigs were sold in auction markets; today the figure is 20 per cent.

In 1956, under 1 per cent of pigs in Great Britain were sold on contract; today the figure is 40 per cent-equivalent to 4,000,000 pigs a year.

No comparable development has taken place with beef and lamb and over two-thirds of all these animals are sold in the auction markets.

As I mentioned, we are in the midst of a pilot scheme on beef and lamb. The principles which we followed in heavy pig development appear to apply to beef and lamb equally strongly. The consumer is looking for a high quality meat of standard quality week in, week out. We have found from consumer research, the only worthwhile starting point, that the main requirements are firstly appearance and presentation; secondly, tenderness; and thirdly, flavour.

To satisfy these requirements, it is necessary to be able to get the righf animal produced in the right way. This will require contracts with farmers, involving full liaison and advice. The meat must be properly hung, properly

Pig.

360 W . S. Bolillio

cut and jointed and properly presented. The production on the farni will, I believe, be based on a semi-intensive system, utilising grass to the utiiiosl, to provide animals of 9 cwt. at about 18 months of age. This will permit a better How of animals throughout the year by using grazing, grass by-products arid concentrates whilst at the same time eliminating any store period.

For lamb, methods of production are more standard but to satisfy the market requirement, it will probably be necessary to take light lambs between .4pril and June, medium lambs between July and September, and larger lambs marketed in October and November and kept chilled until February. There will be, probably, a gap in the first quarter of the yLar which will be met with New Zealand lamb.

These are current developments. What of the future? The two phrases which one hears most often relate to Integration and to Marketing Boards.

Integration has almost become a bogy-yet this is hardly supported by the facts. Other than in poultry, there is little evidence. If integration is logically carried out, then production, processing and retailing must be in the bame hands. The factory capital will double the capital required on primary production, and the retail capital will be half as much again. Surely, capital can be far better employed by each section using its own particular skills aiid know-how. The disease risks in concentration are enormous and the require- ment for management and livestock skill would be increased very greatly.

Marketing Boards are a conference subject on their own. Let us just remember that meat is a very raw material, that demand is almost impossible to predict accurately, that supplies of all protein foods are affected by many considerations, that all meat is not home produced, and that any form of refrigeration costs money per se and has a considerable effect on the value of the meat.

I think future developments in marketing will follow a logical pattcin. I believe supermarkets and similar outlets will gain an increasing share of the fresh meat trade. This will require more standardisation of products, and of

The onus will firstly be placed on the processor to meet the supermarket dernand-and this involves closer relationships between farm gate and factory .

Inevitably, the producer will have to move away from producing what he thinks is the answer when he is prepared to produce it. There will have to be a development-partnership, a kind of vertical co-operation between the producer and processor whereby each side knows what the other is doing, what his costs are, and what his return on capital is.

The producer must be given the tools to do the job-whether in nutritioiial advice, in breeding stock, or in management.

This must be supplemented by progresive and practical research to yield improvements on the farm in costs of production and in the factory, in carcilbe quality and lean content, and in developing new products.

Not all units will get bigger nor will every small farmer be doomed. Tlierc must, however, be a greater emphasis on specialisation, which requires the bcs t use to be made of assets which exist. In this respect on the breeding side, the smaller unit has many advantages which do not apply to fattening.

I believe that a production structure will develop where the smaller unit will be responsible for breeding and the larger unit for fattening.

The larger unit will seek a contract with the processor, and will in turii place a contract with the smaller unit for the young stock.

supply.

L Disciissioii 01c W. S. Eolitlto’s Papev 361

Each side of the farming gate will use his own capital in the way he knows best but there will be a much closer relationship and awareness of each other’s problems.

These developinents will progress-without this we will not secure our main objective-a larger share of the home market for home production.

DISCUSS~ON ON W. S. BOLITHO’S P.~YEH. W. E . Cove

I am very pleased to comment on this terribly iuteresting paper. I thought Ah. Bolitho read a first class paper and I would like to offer my congratulations Loth to hiin and also to Messrs. Walls for the leadership they have shown in marketing pigs in the post- war era. The first thing they have demonstrated clearly is that i t is possible to get farmers to make forward contracts for fatstock and to keep to these contracts and they have shown that it is possible to forecast with a considerable degree of accuracy the number of animals that are going to come forward at a particular time.

We are often told that the marketing of aninials from British farnis is coiiipletcly unpredictable and I am not surprised that this should be so when a quarter of a milliuii farmers take a quarter of a million different decisions about tlie type of animal they will produce, when they are going to produce it and when they are going to market it. There are factors, of course, outside the farmers’ control, which can influence the timing of marketing of livestock but the processors have to meet a comparatively regular demand for their products and Walls have shown that the demand for their products can be matched by the supplies coming forward from their contracting producers.

I would like to put a question to our speaker but I hesitate to do so because I understand that Mr. Bolitho is not only Director of Marketing but also the Director of Research and I am extremely hesitant to cross swords with him or Messrs. Walls on this point. but I am quite unable to understand why they have pushed heavy hugs so much in this country. I have not seen any of \Valls’ processing plants but I have seen others including some in the United States and when these enormously heavy pigs come in the first thing they do is to cut off a large amount of fat. I have seen two inches of fat cut off thousands of hams and when I saw this in America I said: “what the devil do you do with all this lard?” The man said: “we send it to England and you eat it!” It does seem to me quite ridiculous to pro- duce all this fat and then cut it off and sell it for between a fifth and a tenth of the price we can sell the lean meat. This might not be so silly if technically it were cheaper to pro- duce fat than lean. I am on difficult ground here because I do not know the precise figure, but I am told that it requires between three and five times as much food to produce 1 Ib. of fat as it does to produce 1 Ib. of lean meat and it seeins absurd to go to the extra effort of producing fat and then sell i t at 10 per cent of the price of lean meat. .as Walls prefer a pig of over 200 Ib. deadweight there is also the added factor of the coilversion ratio dc- clining with the increasing age and size of the pig so that the economics of producing fat seem even more suspect. I would like to conclude by again congratulating Mr. Bolitho on his paper and Messrs. Walls for their leadership in the field of pig marketing.

F. G. Slurrock: Can I answer Mr. Cave’s poiut right away? A t hrst sight it niay seeit1 iuelficienl to

produce heavy hogs with an excess of fat that niust be trimmed off the carcase. Indeed, some critics become quite emotional in denouncing heavy pig production on the grounds of “inefficiency”. But this is because they consider the problem solely in technical terms. In economic terms the production of heavy hogs makes very good sense.

The processor has a choice. He can encourage farmers to fatten pigs to 205 Ib., the conventional Wiltshire bacon weight, or he can encourage them to fatten them to 260 Ib. \Vhich is he to choose? Against the heavy hog is the fact that as the animal grows in size, the efficiency of food conversion declines and the pig consumes inore and more meal pcr 1 Ib. liveweight increase. In addition, the proportion of fat increases. This means that the variable cost of food per 1 Ib. liveweight is rising steadily as the pig increases in weight. On the other hand tlie cost of the weaner (say f.5) is the same whatever the size of the pig produced. I t follows, therefore, that the heavier tlie pig the lower the fired cost of thc weaner per I lb. of liveweight produced. When one puts these two curves together one finds that the lolul cost per 1 Ib. of pig produced is falling steadily between 205 and 260 Ib. This means that the farmer can accept a lower price per score a t 260 lb. than a t 205 Ib. and still show the same return on capital invested. This lower price also compensates thc manufacturer for the extra fat that he has to accept with the carcue. There is a further point. Walls state that they like the large hog because i t provides a larger slice of lean- and if that means too much fat. it can be trimmed off and used in cooking their pastry.

362 Discussion 012 W . S. Bolitho’s Pajvr

At Cambridge we have compared the profitability of these two markets for a number of years and have found that the profit to the farmer has been nearly the same in both cases. This is because the manufacturers of heavy hogs have been clever enough to offer a price just below but close enough to the bacon price to call forth the supplies they need. If they offered less they would not get the pigs. If they offered more they would be giving away an unnecessarily large share of their profit.

Perhaps the most significant fact is that heavy hog manufacturers are flourishing and have captured quite a large part of the pig market whereas Wiltshire curers have been slipping-this could hardly have happened if heavy hogs were less profitable than bacon pigs.

G . H. Brayslraw: This is the second time I have enjoyed listening to hfr. Bolitho, and I, too, would like to

thank him both for his excellent account of what in private discussion he termed “vertical co-operation”, and for emphasising how important he considers this to be for a multi- product firm such as his. In particular, because I think that in doing so he has put the bogey of vertical integration into better perspective. May I also ask one small point, Does Mr. Bolitho consider the present structure of pig production to be satisfactory, or does he believe that considerable economies would be obtained by larger scale production?

P. CIery: Does Mr. Bolitho find there is any advantage in working his contracts so that the

breeding and production are kept separate? Dose he envisage breeders breeding a supply of pigs the destination of which he controls a t the intermediary stage, or does he find and feel that it is more successful to keep breeding and production in the hands of one producer? Are there economies of scale to be got from separating fattening and breeding?

A . Evans I should like to pull out one principle. namely that the animal is the product, so f a r as

all live stock are concerned. Perhaps due to the fact that the pig has certain characteristics which the other animals haven’t got its parts become the product. Perhaps more important is the large product herd ratio in pigs, or the large product flock ratio in poultry: but with cattle and sheep most of us who have been considering the marketing problem, have been coming to the conclusion that the portion of meat is to be the product and not the animal. Now virtually the message behind this paper is that applying what we have learned from pigs, we are now going to see whether the animal isn’t the product after all. This means that the factory is in an entirely different position, it is looking for a product as opposed to the factory taking the farm output and then making it into a product.

L. G . Collyer: Being concerned with fruit and vegetables. I cannot follow Mr. Bolitho into the mys-

teries of pigs. Nevertheless there are parallel developments in the marketing of our respec- tive commodities. Mr. Bolitho’s organisation has created what I call a ”closed circuit” marketing organisation and has taken it outside the public marketing circuit. The same thing is happening in horticulture. The throughput in the public sectors of marketing (the markets) is declining whilst those of the private “closed” sectors is increasing.

This development makes the introduction of modern techniques of control, standardisa- tion and large scale production much simpler but a t the same time makes the lot of the smaller producer more difficult. Often it has a bad effect on price formation in the markets, particularly of the reIatively more perishable commodities. Private affluence and public squalor, as it were.

Of course, from the point of view of the economist there is little to worry about. Unfortunately, however, Governments all over the world are concerned for political reasons to support, with public money, the small producer. As the “closed circuits” develop in size and efficiency, so the burden of this support becomes heavier.

This problem seems to have been recognized more clearly in Europe than in this country and America. In Europe great emphasis is being placed upoii the reformation and modernisation of the public marketing systems and legal brakes put on the closed circuits.

The proposals for the rationalisation of agricultural marketing now being put forward in Brussels seem to me to be designed to keep marketing circuits open and to allow and encourage competition between operatives a t all levels a t least within the Community itself.

I often wonder how long the U.K.’s agricultural support programme can continue to ignore these developments and I should like to know Mr. Bolitho‘s thoughts on this.

Discussion on W. S. Bolitho’s Paper 363 A . A . Marsh:

I would like to hear more about the consumer enquiry in regard to beef and mutton and lamb. We are not told very much here, and this I am afraid is all too often the case in regard to consumer research carried out by agencies like Messrs. Walls or for and on behalf of agencies like Messrs. Walls, and this seems to me to be a pity, at a time when the speaker himself has said there must be more understanding of each side of the farm gate for the benefit of all concerned. How much were we told this morning? “We have found from con- sumer research that the main requirements are firstly appearance and presentation!” Now what sort of appearance? We know very well a lot of beef we eat is cow beef, it ought to have a label. “positively the last appearance” on it. What is good appearance, by what criteria do consumers judge tenderness and flavour when looking for high quality meat?

I wonder what this word presentation means. I am perpetually amazed at, and sceptical of, the services offered by the supermarket. Meat can be presented on a papier miich6 tray with a pliofilm cover and with a piece of plastic parsley. What manner of presentation was put forward by consumers as their main requirement?

C. S. Barnard: This morning’s paper has concentrated on the measures adopted in the marketing of

one particular product. It is interesting to speculate how readily such measures can be applied to the marketing of other forms of meat. Even the potential methods of production or grass-fed beef and sheep visualised in the paper (top of page 360) pigs, by comparison, seem to have several advantages when it is a matter of closely regulated production and marketing.

One is that the pig’s environment is far more under the control of the producer and less influenced by natural and seasonal factors. In consequence, not only is output more easily forecast and achieved, but as inputs are also likely to be less variable, production perfor- mance is more readily established. In addition, it is relatively easy to isolate a pig enter- prise from the rest of the farm-largely because i t is not directly land-using-which, coupled with the greater certainty of controlled inputs and outputs, makes cost estimates more meaningful.

This being so, it seems doubtful whether it will be possible to achieve the same degree of success in the marketing of grass-fed beef and lambs, as has been achieved with the heavy hog.

H . F. Marks: Mr. Bolitho has, in some respects, been too modest about his company’s achievements.

One of the most interesting things is the fact that Messrs. Walls were among the first to realise after the war that it was a great mistake to try to isolate the pork and the bacon markets. They were also among the first to realise that curing Wiltshire bacon only was unlikely to be very profitable in the long run. They realised that there was not a sufficient number of uniform good quality pigs available to put into cure and, moreover, that greater profits are to be made by diversification. In so far as the relative merits of producing bacon and heavy pigs are concerned, I have spent quite a lot of time studying this problem. There is no one answer. The answer depends on individual farm circumstances-the breed and strain of pig on the farm, the potential grading results, the feed and housing that is available.

There are three questions I would like to ask Mr. Bolitho. Firstly, would he tell us a little more about the consumer research which, after the war, decided his Company to embark on its present activities. Secondly, could he give us more details about his Feed Price Contract. Does the contract ignore the adjustments under the flexible guarantee scheme? If a large number of companies were to adopt a contract which does not take into account adjustments due to the flexible guarantee arrangements, then the Government, between reviews, would find it very difficult to try to regulate the pig population. Finally, does Mr. Bolitho think that forecasting the supplies of pigs for up to eight weeks ahead could have a national application? Would results based on a carefully selected national random sample be useful from the point of view of market intelligence?

G. Allanson: Walls have been very successful in aligning farm production with factory processes in

the type of animal required. May I ask how successful they have been in phasing farrowings on the individual farms in order to use their buildings to the full and also in phasing the number and size of contracts in order to ensure continuity of supplies to their factories throughout the year?

J . A . Rudderhain: I would like a few points of detail about the contract. Firstly, I understand it is linked

to average prices; I should like to know what series of average prices are used. Secondly, it

364 Discussion on W . S. Bolitlto’s Pa+er seems to me that as the operations of Walls and similar institutions and agencies become wider, the market price outside will become niore and more unrealistic.

LV. s. Bolilho: I ought firstly to clear up one misconception. I am not a director but the General

hIanager for pig buying and pig research. Perhaps I am also responsible for political matters, subsidies! etc. and for competitors. Somehow i t all gets together a t one stage.

Now, Mr. Cave’s theme was, why tlie heavy pig. We considered this quite separately under two heads. One, what was going to happen as far as rctailers were conccrncd. Were they going to be in a position to have cheap labour and to cut up carcases in tlie shop? Did they have the space to do this, did tlicy need the space for other reasons? Was tlie consumer going to have more spending power. was the housewife going to be at work, was she going to have the same time to prepare and cook food, was she going t o have the background in selecting food that she had pre-war when economic circumstances were very different? Were super markets and self service convenience shops going to grow? If they were, as we believed would happen, in what form was the consumer going to buy goods and what was she going to want? If she liked something she was going back to get i t again-tlicrefore the product had to be identified. We reached the opinion that there would be a demand for a standard article guaranteed by a brand name. We therefore went back to the factory,we cut up pig carcases a t differing weight ranges from 140 to 320 lb. live weight which gave us a very considerable weight range. We found that the carcase which would give us the answer in terms of size of joint, rejection rates, acceptability, was from a pig between 240- 260 Ib. live weight. Now we also carried out a survey of cost of production, on the basis that unless i t could be produced economically there was no point in going on with it. As far as the farmer was concerned, and cutting up this carcase i n precise terms of lean, senii- lean. fat, gristle, bone, kidney, dare, rough fat. best fat, the wliolc lot-the cost of producing a pound of lean meat whicli we took as a yardstick was lowest at a live weight of 300 Ib. I n other words the farmer could produce i t most cheaply at that weight. This was quite unacceptable from the consumer point of view in ternis of joints and the actual yield we got from these various products. And therefore taking the two things in balance, we finished at 260 Ib. liveweight, giving us a carcase of about 205 to 208 Ib. Now I think the average Subsidy in 1954 was about 15s. per score. We didn’t think this was likely to continue at this rate, neither did we believe-that we would be shielded by import duties, from competition from abroad. We had to base our development upon nieeting conipetition at home, on the possibility of declining support and on stronger competition from abroad. We felt this could be done with the heavy pig.

Now, another major consideration-we looked at Wiltshire baconers. we knew a fair bit about them at the time-producing a branded product. One had to get consistency in the ratio of lean to fat. One had to get fairly consistent size eye muscle in your ration of bacon in the number of rashers per pack. And we found that to meet what we believed would be a developing demand for pre-packaging, we could not afford to liave a high re- jection rate of the prime cuts in the factory. You will probably lcnow the general complaint of the present grading system for Wiltshire pigs. It isn’t necessarily reflected on the counter when i t is sliced even if i t is the top grade. We were cutting these pigs up in the factory and our rejection rate on the normal run of pigs through the factory-the whole lot, not just the best-on middles for back bacon was under 2 per cent, and our legs rejection rate is virtually nil. This is the sort of basis we have to work on. We can only achieve this provided that we have pigs that grow quickly, put on weight, and convert cficiently. I t keeps the farmer in business and this means perhaps that we have to take off fat. Now, we have uses for this fat. I t used to be said, of course, the fat goes to ice cream. This was a very popular saying five years ago, which was obviously flatly denied. There is 110 connec- tion in this whatsoever. Tlie ice cream compauies would go out of business very quickly if they had to buy pig fat.

Now. 90 per ceut of our lard is imported from America. That is a fair market for a start . Secondly, we have a large manufacturing business where we need fat. You can’t make good sausages, pies without pig fat. We have to buy fat a t times.

The other thing is. that taking account of costs of production on the farm, i t is much more espensive. much more wasteful for the farmer to do all thc grading on the farm than i t is to do i t in the factory. You can do it subjectively with a knife.

\Ve noted what was going on in America. The problem is rather different in hiiicrica, in that the emphasis in the American Packing Station is on the cost of labour. Ours is on the cost of material. This emphasis will change. We did not set out to introducc a grading standard-measuring this or t ha t joint, cut, back fat or whatever you like-we set about to try to get animals which it would be economic for the farmer to produce on the farm and to give us the benefit in the factory. This was a positive approach. It is quite easy to go along and say, this pig has so much back fat , reject it, and so on. What are you achieving by doing this? Do we expect the farmer to produce absolutely blindly without telling him

Discussion on W . S. Bolitho’s Paper 365

what is required and how to produce it. I don’t think one will ever get anywhere unless this is applied to all live stock. What does the market want? What is required? How do you produce it? Now the heavy pig won on this. We have studied all the forms of costing. we study i t constantly and I am extremely grateful for the points Mr. Sturrock raised. I believe my Chairman said, some four years ago, that we could get our lean meat more cheaply from the heavy pig if we poured the fat down the drain and paid someone to do so. We need the fat but also let us not forget t ha t if you want good eating quality there has got to be some maturity and you must have some fat. But you can produce a standard product much more economically. and achieve a much more consistent product, by trimming fat than by just saying the lean is deficient. There may be no fat but the lean is deficient. You don’t get anywhere on that basis.

There were two points raised on the question of integration and size of production unit. Over the last six years the average number of pigs coming to us has increased from about six per week per producer t o 10. This has not come about as the result of any deliberate action on our part, it has comc about by sheer economic circumstance.

Mr. Collyer mentioned the possible cffect here of putting up a ring fence, and so on. It is not our business quite frankly, to organise the whole of the meat market in this country. There will always be a sector which is free, which will reflect demand very rapidly and much more accurately than any fixed system of marketing. I agree that there are dangers in this, hut the market outlet-the free market outlet-will reflect shortages and over supply much more rapidly than any other. We are to an extent inflexible, the auction market isn’t, and the free market isn’t. We have got to see that, over a period, we are competitive in the price that we pay, and also in the price at which we can sell goods in the shop.

I think there is considerable possibility in applying to beef and to lamb, the method of forecasting future production. But i t will only come about if people are prepared to say what number of animals they require. It has to start from that end. In other words, there has to l x a market first of all, a definite market, and then you have to look back to the farmer and say, “right what have you got” and persuade him that it is in his interest as well as the buyer’s to know these things.

On breeding and fattening some units will happily combine both, others will perhaps specialise on breeding and others on fattening. This could be determined by pure circum- stance in each case. If you have a small farm with no particular assets and feeding stuffs etc., i t may do better at breeding.

I was asked quite a bit on consumer research. I am not an expert on consumer re- search. I don’t lcnow all the answers but the particular point that was raised on this was appearance. Appearance was judged by whether the consumer would take up a particular article in preference to others which were available, and then ask her why she did so. Because the meat was the right colour, i t seemed to have the right ratio of fat to lean. there was no blood in the fat, and it was properly presented. Then followed, of course, the question of her reaction to tasting this-tenderness and flavour.

Then Mr. Marks raised the question of feed price contract. I said this was a risk as far as we were concerned. No, we have no built in factor for flexible guarantee. We only have a small proportion of our buying on this, about 10 per cent. It is still virtually experimental: but we have to take this risk and i t is one of the things that one has to live with in advancing a new system of contracting. I don’t think the numbers involved on this are going to have any major cffect in offsetting, say, any aims and effects of the flexible guarantee.

On Mr. Allanson’s point on the question of phasing. farrowing and so on, we try to get down with producers to try and find a basis for planning their production ahead, before we actually work out the terms and number they will deliver on the contract. What is he going to produce? Not just sign n contract for 100 pigs a month-this means nothing. What pigs has he got, how many is he going to produce, what does he plan to do, how does this need to be done?

Mr. Rudderham asked about average prices in contract. Our average price contract takes the year, and divides it into 1:) periods each of four weeks. The price that we pay in any period of four weeks is the average of our weekly prices for the preceding four weeks. So on the assumption that the man stays, honours his contract, he then gets the average price over the year. Mr. Rudderham also asked whether market price would become unrealistic. I t is awfully difficult to know what prices are being paid at various times. We have a fairly good intelligence system and I don‘t think producers are reluctant to tell us, if they think our prices are out of line. Neither would I be happy with my responsibility- if the price was not in line. I would equally be told i t was too high from other quarters. One has got to strike a balance and this is what really matters. \Ve find t h a t producers generally have the confidence to accept a lower price in certain periods on the assumption that he will get a fair level overall.