The Pig Guide - Editorial Articles
Opportunities remain to be taken despite the volatile environment
by Mick Sloyan, chief executive of the British Pig Executive.
The word volatile quite neatly sums up what is likely to be happening through the UK pig industry over the next 12 months.
Some of that continuing volatility, will actually be in our favour and some won’t. The key elements are what happens to feed prices, where the exchange rate goes and how consumers react to the events in the wider world – particularly the effects of the credit crunch.
On the feed side, we have seen grain prices falling over the last 12 months
- feed wheat hit a peak of £192 a tonne in March - and the futures markets indicate they will continue at low levels until at least the end of this harvest year but we do need to keep a very close eye on them.
BPEX has set out specifically to help producers not only to keep an eye on grain price trends but also to take advantage of them when buying feed. There is a section on the website (www.bpex.org.uk) which covers the futures prices for wheat,
soybean meal and maize, all of which are updated hourly while the markets are trading. It is the result of collaboration between BPEX and HGCA – both now part
of the new Agriculture and Horticulture Development Board.
There are also graphs looking at longer term trends in feed grains plus the Brent crude oil price which is closely linked to cereals and soya prices. These are just a few figures from the mass of information now available in the Market Intelligence section of the BPEX website.
Once visitors have logged in they will be remembered and never have to log in again and will have a huge amount of information at their finger tips enabling them to make more informed decisions which in turn will make for more efficiently run businesses.
A feature of 2008 was the volatility of the sterling exchange rate. In the space of 12 months it has gone from somewhere in the region of two dollars to the £ to 1.65 at the time of writing, the lowest level for some five years. While enouraging exports, the reduced value of the £ has the reverse effect on imports and has a material impact on the cost of soya which is always calculated in US dollars.
The sterling value of the euro has also moved significantly, edging close
to parity during the final month of 2008. As a result, shipments of pig meat to the UK from the EU became much more expensive.
Now we move into the unknown - the potential volatility of consumer behaviour particularly in the light of the credit crunch and changing spending patterns.While it has to be looked at carefully, it does present tremendous opportunities for pork products. The price point of pork is very favourable compared with beef and lamb and we have a range of products that are both versatile and extremely good value for money.
We have already seen some trading down from beef joints to pork joints and increases in the sales of sausages – especially the better quality premium sausage.
The Pigs Are Worth It campaign was launched when feed wheat prices went through the roof and though they have now come down, the campaign still has a role to play.
Its emphasis has shifted from the need to get producers a fair price to encouraging consumers to buy pork as it is healthy – a major concern nowadays – and great value for money, an important point in times of financial turmoil. But retailers and the foodservice sector will be under pressure and will be transferring some of that pressure down the supply chain. It is going to be an exceptionally competitive environment.
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The best way to predict the future is to create it
by Rick Sanderson
To be an innovator requires vision, focus and a willingness to gamble. You need to take advantage of or create some ‘Blue Ocean’ opportunities, meaning that you do not want to be swimming in the red waters with the rest of the competition. So, how can you set sail for some clear blue water in which to guide your business?
Eighty per cent of UK pigs are currently swimming in the ‘Red Waters’, searching for a premium position in the future demand for quality pork meat.
‘Sharing’ this space are other UK proteins and more cost -effective foreign imports of pork cuts, driven by EU ownership of two thirds of our processing sector.
The ‘Red Waters’ in terms of our typical consumer are the doorways
to our large supermarkets, with the big four now dominating 70% of the UK grocery spend. Consumers walking through their doors are increasingly looking for value, and are willing to shop around to achieve it. In addition to which, a significant proportion of these consumers are consciously cutting their meat intake, alongside a growing trend towards vegetarianism among many younger people.
Brands within the supermarket
There are some tremendous examples of how farmers have diversified and become innovators over the last few years. Debbie & Andrew’s are a great case in point, by creating a brand based around values and personality, along with a fast-moving product portfolio, they successfully carved out a £5m turnover business three years ago, set to be worth some £20m by the close of 2009.
Debbie and Andrew Keeble, operating out of their farm in south Yorkshire, recognised that they were producers of food, focused on how that might eat, look, and appeal to consumers - and created a brand around that clear focus to create some ‘Blue Water’.
Supermarket own-labels
Sales at discount supermarkets such as Aldi and Lidl have soared in the past year as consumers tighten their belts. Latest grocery market share data from TNS found that during one 12-week period last year, Aldi posted year-on-year sales growth of a whopping 18.9%, with growth of 9.6% at Lidl and 4% at Netto.
It might be reasonable to assume that this represents yet another door closed to premium British pig meat?
Not so it would seem - Lidl in fact has now thrown its weight behind British pig meat in a major policy change. The discounter will switch all its fresh pork lines to British from the end of January 2009, and 40% of its bacon will be British by February too, along with 40% of its sausages.
Previously, products would have been from Denmark, Germany and
the Netherlands. So why the change? Discounters now clearly recognise the value in quality, provenance and the need to satisfy consumer demand to grow their business. What a great opportunity for UK pig producers.
Farmer-run post
farm-gate markets
And there were some fabulous examples of farmers diversifying in the last year or so to create ‘Blue Water’ for their businesses. Adam Marshall and Sandy Pate, two pig farmers on the Scottish borders, created ‘Oink’ – a breakfast-bar style takeaway bringing hog roasts to the masses.
Jimmy and Alastair Butler at Blythburgh Free Range carved out a widely recognised brand across premium gastro-pubs in the UK in addition to a box delivery scheme. Pig Farmer of the Year, Andrew Freemantle, has a farm shop, retail supply chain, hog roast catering business and e-commerce sales.
One thing is in common with all these examples of diversification and innovation, they are all close to their consumer. They understand and are adapting to their consumer demand, and move quickly to change with their trends and habits.
More than £6billion in rural development funding for a variety of farming projects has just been made available by the government, with £600m to make agriculture
more sustainable and competitive.
So how can your farm benefit? There are grants of up to 40% for ‘Added Value’ projects involving processing of produce, ‘Diversification’ projects attracting up to 50%, and ‘Training’ projects up to 70%. So could there be a better time in terms of thinking about taking the next big step?
That, in essence, is what my consultancy Gate to Plate Solutions is all about - helping farmers capture the maximum value available to them in the food supply chain.
To end where I began - I heard a great quote last year from a senior manager of Premium Standard Foods, the USA’s second largest integrated pork processor.
He said: ‘The best way to predict your future is to create it!”. 2009 could be the time for you to find your ‘Blue Water’ and do just that. It is your future after all.
Rick Sanderson
Gate to Plate Solutions Ltd
Tel: 0845 880 7055
Mob: 07815 921 540
Email: gatetoplate@live.co.uk
Web: www.gatetoplate.co.uk.
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BPEX makes plans for more ‘Action’
by Mark Wilson, director of pig industry development, BPEX
The publications produced and workshops held during the last 12 months have been well-received by the industry, so we plan to build on this and respond to the feedback we have been receiving.
Look out for more Action for Productivity sheets. The A4 sheets
in this series provide information on a wide range of topics highlighting a specific issue, why it is important and the key areas of management required for success.
Focused and to the point, many of the sheets also include legislation and national standards, giving physical and/or financial benchmarks to be aimed for. To date, there are 19 printed with more planned covering topics such as gilt management, lactation, feeder management and the farrowing house.
There are currently four sheets in the Target Pork Quality series in conjunction with the Pork Chain Unit at Bristol. Excellent pork eating quality is one of the main drivers for consumers and a consistently high quality product is essential to keep them coming back for more.
There are more planned for 2009, though the subjects have yet to be finalised. The first will cover evaluating pork eating quality: A guide to good practice for taste panels.
The guides are aimed at all processing businesses from the large scale to the smaller specialist farm shops. They give sensible, practical advice to see fantastic eating quality and highest value pork produced consistently to keep the consumer coming back for more.
Advice on how to implement the Target Pork Quality and Action for Productivity fact sheets is available from BPEX. Copies of the publications can be downloaded from the BPEX website, www.bpex.org.uk, or by contacting Miriam Drewett on 01908 844749.
Having also received positive feedback for the 11 work instructions which are available to download from the website, we will develop the series on an on-going basis.
Those so far produced included slap marking, preparing a farrowing crate and vet and med storage. The work instructions give a clear set of tasks that need to be achieved to reach the goal set at the start of the work instruction.
They are especially useful for new members of staff or if there is a problem on farm with any of the subjects covered they are a good tool to help you go back through the basics and make sure everything is being done as it should be.
For a copy of any of these work instructions or a copy of ‘How to write your own work instruction’ so you can develop one for your own unique system, contact BPEX.
The new subjects we will be tackling are not set in stone and we will be
only too happy to take on board any suggestions. PDF versions are available to download on line or if producers want a version that they can edit themselves to suit their own practices word versions are available from BPEX.
The now established producer groups will continue to run throughout the year and these will be covering a wide variety of topics. Helen Thoday’s list of topics prioritised by the groups so far includes:
- Gilt management
- Establishing the weaner
- Outdoor problem solving
- Dry sow management
- Energy saving on farm with Nigel Penlington
- Managing the second litter to avoid a drop in performance
- Better control of ventilation to maximise growth and efficiency
Although there's no Pig and Poultry Fair this year, we are planning an industry conference around May-June, details are not confirmed but watch this space!
An interactive producer group map can be found on the BPEX website. This highlights where each producer group is in the country so that people can easily see where their nearest one is. The map provides details of meeting times and locations as well as contact details for the KT Manager responsible for organising the meeting.
It’s your money we’re spending so please let us know if we are missing critical topics or are hitting the right areas.
To contact the Knowledge Transfer Team visit: www.bpex.org.uk
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Strategy vision now a reality
by Richard Longthorp
It is now some two years since the pig industry approved the skills
strategy consultation document From Sustainability to Sustained
Ability. So it is interesting to see just where we are now with its implementation.
And it is pleasing to report that the pig industry has an absolutely first class skills development "offer" that is the envy of some and admired by all.
So what is it that is now on offer?
Certificates of Competence - designed by the industry with the working stockman firmly in mind but fully accredited by the Qualifications and Curriculum Authority. These certificates currently cover three levels - basic stockmanship and welfare, pig husbandry and pig unit supervision and operation.
Training Manuals - for trainees and trainers alike. These manuals are designed to be used by people working towards the certificates of competence but are also a valuable source of information for any pig business.
Pig Industry Professional Register (PIPR) - the pig industry's own continued professional development scheme. Open to all in the industry at six different levels - new entrant, skilled stockman, supervisor, manager/owner, adviser/associate and pig veterinary society.
PIPR records and recognises all personal development activity be it attending formal training courses, attending a BPEX technical meeting, an internal company technical meeting, or veterinary visit.
Trainee of the Year Award - now in its second year as a national award sponsored by Pfizer in association with Pig World - this recognises the development of skills and contribution made to businesses by individuals. It also recognises the commitment of their employers to skills development. The 2008 award was presented by Lord Rooker at Westminster in front of some 70 industry representatives, movers and shakers.
Nuffield Award - many people will have heard of the well respected and prestigious Nuffield Scholarships and now the pig industry has its very own Pig Industry Nuffield Award jointly sponsored by BPEX and Merial.
This annual award is open to all from right across the spectrum of the industry - from production to processing. It will allow the successful applicant to make a
study of some aspect of the pig industry anywhere in the world with the intention of delivering benefits to their own business or the businesses in which they work and the UK industry as a whole.
Management Development Programmes for existing managers and supervisors leading to formal accreditation - these courses are already well established, highly respected and run by Cedar Associates. But, whereas, in the past perhaps some
people may have attended these courses on an ad hoc basis, they will soon be able
to effectively link courses and have their participation recognised and accredited by the Institute of Leadership and Management.
Management Development Scheme for Graduates - in its final stages of development but will offer newly employed graduates and their employers an opportunity to quickly build on the academic and technical skills by fast tracking them with management development activities - formal training courses, being part of a group of similar people from across the industry and ‘parachuting’ them in to many of the different sectors that make up our industry.
Training Groups / Pig Clubs - it can be seen from the vast array of potential skills development activity that there is also a need to ensure that producers are able to participate. One of the key elements of this has been the development of training groups or pig clubs. There are now over 20 of these across the country. The benefits of operating as part of a group cannot be overstated. It is not just the formal activity that is important but also the informal chats that take place between people - or as Woodrow Wilson, 28th President of the USA put it: “I not only use all my brains but all that I can borrow.”
Skills Development Manager - last but by no means least - of course none of this could have happened without some significant human resource. Fortunately the BPEX board recognised the crucial importance of skills development and appointed a full time skills development manager.
We were, I believe, equally fortunate in the choice of the person to fulfil that role. So while it was the foresight of the likes of Gerry Brent and colleagues who had the vision to instigate the development of a skills development strategy for the pig industry, it was Tess Howe, along with her colleagues in the BPEX KT team, who ensured that the initial vision and aspirations were transformed into reality.
With more and more attention being placed on skills and the increasing reference to skills by farm assurance, government and customers alike, the pig industry is well placed to tick all the boxes. But let us not forget, of course, that the first and foremost reason to develop skills and have those skills recognised is that it will deliver better business performance.
Better business, more highly motivated and fulfilled people, happy customers and inspectors, more and more producers recognising the benefits - it really is a no brainer!
For more information contact:
Tess Howe: Tel 07779 321078
Email tess.howe@bpex.org.uk
Or visit the websites:
www.bpex.org.uk
www.npa-uk.org.uk
Richard Longthorp is chairman of the Pig Industry
Training Strategy Implementation Group.
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Ten top tips...
The past year will be remembered as a time of instability in the money markets, unprecedented for our generation. This is as true for the pig sector as it is for the whole UK economy (or even the world).
At JSR we always manage the business in such a way that we are able to ride out the downturns and take full advantage of the upturns. This requires strict discipline in fields such as budgeting and planning and still proves to be a complex and tricky process, especially when commodity prices have been so volatile.
There are fundamental things that we as pig producers can do to try to reduce the effect of market volatility, overcome financial challenges and maximise profit making potential. The following ten tips are ones that we use to provide us with a degree of stability in an erratic economical environment:
1. Plan effectively - This is a continuous process and is not always popular with staff members who are keen to just get on and do the job. However, planning does give you the chance to take a step back from day to day jobs and take time to think about what you are doing and why you are doing it.
2. Budget - This can be considered as part of the planning process and is normally viewed in the same way, but a detailed budget enables you to examine the sensitivities - what happens if feed price goes up £5/tonne or we increase slaughter weight by 5kg.
3. Minimise your risks - Buying your feed ingredients forward allows you to take a longer term view and reduces volatility in the feed costs. You don’t have to buy it all forward, but can take, for example, 25% over the next three to 12 months to give yourself some knowledge of what the price for your feed will be over that period.
If you have made a budget then you can also buy forward, based on your budgeted prices. For example, if your budget has wheat in at £120 and you can still get some at £110 then buying it at that price will, of course, be an improvement on your budget. This becomes particularly relevant during unstable periods when predicting or estimating future wheat price is increasingly difficult.
4. Keep good management information - At JSR we use several Key Performance Indicators which we monitor on a regular basis. This is to understand how the business is performing and to assist in identifying any critical issues at an early stage. These include feed usage per pig, feed cost, farrowing rate, mortality etc.
A number of specific targets are listed below:
- A meat yield per tonne of food ratio of 325 kgs of saleable meat per tonne of rearing feed
- A commercial production target of 25 pigs sold per sow.
- Ensure nutrient density will optimise genetic potential.
- Investment in facilities and health to deliver target feed efficiency and growth.
5. Maximise the efficiency of your unit - We are continuously looking for ways to improve the efficiency of our units, whether it is cleaning sites to reduce the disease burden or ensuring the farrowing house is always full. Improving feed efficiency through selecting appropriate genetics and the correct feed is even more important when prices are high.
6. Maintain replacement rates with high quality genetics - Get the most out of your unit through good cull sow prices making sure your parity profile is right - remember that younger sows consume less feed than older sows as they have a reduced maintenance requirement and yield more milk.
7. Maintain an even production - This reduces peaks and troughs and therefore should help to maintain a good stocking rate on your unit. Peaks tend to increase stocking rate and reduce growth rate which will have a long term effect on your unit as well as affecting your cashflow.
8. Sell to the right people - Consider where you sell your pigs and the payment terms on offer. An improvement in terms will reduce your overdraft, but remember that it is only a one-off benefit. The return per pig may also vary between outlets - make sure the outlet is achieving your potential and always strive to be part of a robust supply chain.
9. Invest - If you can access the funds then improving your facilities (such as new buildings) will make you more efficient for the future. Payback for new finishing facilities maybe approaching ten years, but to remain in profitable pig production you may have no alternative. Shop around for finance as you would other aspects of business such as feed, fuel and other commodities.
10. Check your funds - Speak to the bank if your overdraft is likely to increase, agriculture is a low risk sector for banks and so they should be able to assist in the short term. The capacity for borrowing in UK agriculture remains strong.
In conclusion - with the right processes in place, shrewd budgeting and an entrepreneurial spirit you should be able to take advantage of current market conditions and put yourself in a good position for the future.
For more information about the JSR Farming Group visit www.jsr.co.uk