The UK Pig Industry 2010 - 2011

Dr Mike VarleyHead: BPEX KT & R&D

MENU

Consumer Demands & Operational Landscape

Welfare Regulations & Outcomes – Concepts

Where do we go next?

The Operating Landscape Consumers have been vociferous on welfare for

about 25 years in the UK and Northern Europe Consumer research has always indicated that at the

point of purchase they ignore the ‘lip service’ on welfare

It is however a major driver for home produced pork purchase

Producers now realise that welfare is a major ‘differentiator’ for UK Pork against competition from Continental Europe (Denmark and Netherlands etc)

The Operating Landscape UK Pork commands a premium differential price of

around 30 p per kg deadweight compared to the rest of EU industries.

Our supermarket multiple retailers are well aware of this and sell hard on this fact for local UK produce

When imports from Europe really get cheap the retailers have a propensity to express more labelling mistakes !! (isotope analysis can stop this)

Welfare is therefore understood by all sectors of the pork supply chain

Pigmeat Tradeflows

Red arrow: decrease forecast in n+1Black arrow: no significant changeBlue arrow: increase forecast in n+1

50-100100-150150-200

200-300

300-400

400-500

> 500

Flows in '000 t cwe

58

281158

64

303

67

172

948

107

482

264

253

75

120

74

85

66

96

144

325

57

54

65

84

Pig meat

75

80

85

90

95

100

105

110

115

97 98 99 00 01 02 03 04 05 06 07

Ave annual % change 97-07:

000 tonnes Poultry meat

55

60

65

70

75

80

85

90

97 98 99 00 01 02 03 04 05 06 07

Ave annual % change 97-07:

000 tonnes

Beef and veal

5052545658606264666870

97 98 99 00 01 02 03 04 05 06 07

Ave annual % change 97-07: +2.5%

000 tonnes Sheep meat

10.0

10.5

11.0

11.5

12.0

12.5

13.0

97 98 99 00 01 02 03 04 05 06 07

Ave annual % change 97-07: +1.8%

000 tonnes

Global Meat Consumption Trends

Who are the retail players

Feed - UFAS

Farm- ABP/Genesis

Transport - ABM

Abattoir – BQAP (BMPA)

Processing – BQAP (BMPA)

Pigmeat Supply Chain Assurance Scheme

Feedstuff Prices

Feed wheat prices

60708090

100110120130140150160170180190200

Jan-05 Jan-06 Jan-07 Jan-08

£/tonne delivered

100125150175200225250275300325350375

Jan-0

5

Jul-05

Jan-0

6

Jul-06

Jan-0

7

Jul-07

Jan-0

8

Jul-08

Jan-0

9

Jun-0

9

Dec-

09

£/tonne Soyameal, HiPro, Ex-mill LiverpoolSoya prices

Managing the Risk – Protect don’t Predict

There are risk strategies that farmers can take, for example:

- Don't wait until the end of your contract to negotiate the next contract- Buy a % of feed at different times, 25% of their feed every 3 months- Use options?

0

50

100

150

200

250

120 130 140 150 160 170 180 190 200

Wheat Price Nov 08 (£/t)

Wha

t you

pay

in N

ov 0

8 (£

/t)

Spot

Option

Nov Wheat Price

Spot Option Difference

120 60000 66000 -6000

130 65000 71000 -6000

140 70000 76000 -6000

150 75000 81000 -6000

160 80000 81000 -1000

170 85000 81000 4000

180 90000 81000 9000

190 95000 81000 14000

200 100000 81000 19000

Pig Prices

Retail and Price Movements

100

110

120

130

140

150

160

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2007 2008 2009 2010

p/kg dw GB finished pig prices

80

90

100

110

120

130

140

150

160

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

UK EU-27

p/kg dw

EU and UK pig meat reference prices

Currency Exchange

Rates

Exchange rate movements

45

50

55

60

65

70

75

80

85

90

95

100

Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10

Euro US dollarUK pence

`

Net producer margins in the UK

-11

-8

+7

-1

+6

+10 +10

+13

+16+17

+15

+11

+5

+2 +2+3

-15

-10

-5

+0

+5

+10

+15

+20

2007 2008 2009 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10(Est)

£/pig

The Market

Carcase Balance (UK Requirement)

23 Million Pigs3 Million Pigs 19 Million Pigs

UK Production approx 9 Million Pigs

Pork consumption has declined slightly since May 2010, but is still in growth (+0.6%). Beef and Lamb have experienced a decline over the last 3 years.

961

972

978981 980

997

1008

996

990994

941

990

967

12 m/eAug 2007

12 m/eNov 2007

12 m/eFeb 2008

12 m/eMay 2008

12 m/eAug 2008

12 m/eNov 2008

12 m/eFeb 2009

12 m/eMay 2009

12 m/eAug 2009

12 m/eNov 2009

12 m/eFeb 2010

12 m/eMay 2010

12 m/eAug 2010

Total Pork (Cuts)

0.0 3.0

+0.6% vs. ‘09

+2.9% vs. ‘07

Mill

ion

s o

f O

ccas

ion

s

WorldpanelUsage

Total Protein Cuts

+5.2% vs. 07

+0.6% vs. 09

Total Beef Cuts

-6.9% vs. 07

-0.5% vs. 09

Total Lamb Cuts

-1.2% vs. 07

-3.1% vs. 09

Total Chicken Cuts

+6.5% vs. 07

+0.6% vs. 09

How are other proteins

performing?

http://www.guardian.co.uk/lifeandstyle/2010/sep/04/organic-pork-recipes-fearnley-whittingstallhttp://www.jamieoliver.com/bacon/pigwelfare

FOCUS ON HAM AND BACON SANDWICHES

The Rise of the Bacon Sarnie

The BPEX Road to Recovery 2006 - 09The British

Pig Industry

Where are all the pigs?

• 10,000 pig premises• 1600 assured farms

account for 92% production

• 35 companies account for 50% of breeding herd

• 10 companies account for c. 35% of breeding sows

Breeding herd trends

516 514 515

475 470

441

468

449 455

436423 427

445 438455 450

460 460

350

375

400

425

450

475

500

525

550

575

600

Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11

000 head

1100

1200

1300

1400

1500

1600

1700

1800

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

kg pigmeat per sow per year

Estimated sow productivity trends

UK clean pig slaughterings

14.35

12.37

10.45 10.269.13 8.97 8.97 8.90 9.27 9.26

8.66

0

2

4

6

8

10

12

14

16

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

UK clean pig carcase weights

69.1 69.2

70.8

72.172.7

74.174.7 75.1 74.9

76.3 76.7 76.8

66

68

70

72

74

76

78

70.8 72.7 74.7 74.9 76.7 2008

kg

PIGS ARE -

Omnivores – they will eat anything !! Non-ruminants – they cannot digest fibre Very fast growing – double birth weight every 7 days

Reach 100 kg at 140 days Very good feed converters – 2.1 FCR Nowadays – very lean indeed P2 9 mm

Very prolific – 26-33 pigs/sow/year – gives a low maintenance for the breeding female

What Welfare is Important? Outdoor production – versus indoor intensive – 40% of UK

industry is outdoor bred – liked by consumers This is a visible indicator to consumers (who then complain

about keeping pigs outdoors in winter !! UK banned individual sow stalls in 2000 (rest of EU by 2012)

UK all straw based group housed systems Regulations on stocking densities Tail docking banned – but low compliance on this Teeth clipping banned – low compliance Weaning not less than 28 days – high compliance Compulsory use of manipulable materials for all pigs

European Welfare

EU Legislation

QA Rules

Supermarket RulesPremium Rules

UK Legislation

UK ‘High’ Welfare

BMI - Corowa

Large Scale Pig Production

Australia

27,000 sows – one site – 5 modules

Outdoor Pig Production – Yorkshire England

Barley, Wheat, Peas, Beans, Soyabean, Fish Meal, Co-Products

Defining welfare

“An individual’s state as regards its attempts to cope with its environment” (Broom, 1986)

“ Prevention of the experience of an unpleasant mental state” (Duncan & Petherick, 1991)

“ The capacity of an animal to sustain physical fitness and avoid mental suffering” (Webster, 1998)

My optimal welfare is achieved when I have a Lear Jet and 2 Ferraris plus 6 wives and 4 houses to keep them all in. Varley 2010

THE FIVE FREEDOMS

Freedom from hunger and thirst

Freedom from thermal and physical discomfort

Freedom from pain, injury and disease

Freedom from fear and stress

Freedom to express normal behaviour

Requirements of practicalassessment methods

Simple

Quick

Objective

Credible

Welfare Evaluation

Assessment of animal behaviour Stereotypies, Open Field testing etc

Assessment of immune status IgG concentrations, ACTH challenge etc

Assessment of animal performance KPIs growth rate, FCR, morbidity and mortality

Not practicable under individual farm conditions over time

ICEBERG INDICATORS

What you can measure simply and quickly

What it reliably represents in terms of overall pig welfare (but takes too much time and money to measure)

An Iceberg Indicator

Score 0

Score 1

Score 2

Skin LesionsSkin Lesions: : Do a few scratches matter?

Lesion Scoring Systematic subjective scoring of tail and body lesions

The EU Model – Data Flow

Welfare Outcomes – Stage 1

On-farm evaluation (6 farms) of welfare indicators (lesions, dirtiness, lameness, oral behaviour, bursae etc)

Small scale study on limited numbers

Did yield a ‘boil down’ to 5 principal indicators of pig welfare that could be used within existing QA processes or veterinary visits

Bristol University programme

Welfare Outcome – Stage 2

Aim to identify and measure 180 farms – outdoor indoor breeding and finishing units

Full training of local veterinarians

To identify any measurement or analytical / statistical problems

The next stage is then full national roll out

Welfare Outcome – Stage 2

Tail Lesion Score

Body Lesion Score

Lameness Score

Manipulable Material Use

Proportion of Hospitalised Pigs

Conclusions

Stage 1 has produced some ‘easy measures’ that are practical and yet are meaningful in the big iceberg picture

The Stage 2 scheme can be quickly followed by the national roll-out

The programme is supported by the QA programmes – QA inspectors will ultimately carry out the inspections as part of their normal quarterly visits (Supermarkets are watching carefully)

Conclusions

Consumers continue to express concerns on animal welfare but in the UK do realise that UK produced pork is likely to be superior to imported product There is now much more solid supply chain cooperation on welfare and marketing of high welfare UK produce. RSPCA Freedom Foods is also another brand that is known and understood by consumers The UK Quality Standard Mark – the Red Tractor is also well understood

Final Thought!