Urgent action is needed to restructure the British pig industry towards a Morrisons-style vertical integration model if the UK is to have a sustainable pork sector, a major report has warned.
The UK had gone from being 80% self-sufficient in pork 10 years ago to less than 50% self-sufficient today, said Bringing Home the Bacon, which was co-funded by Vion.
The supermarkets’ aggressive trading practices and insistence on flexible supply agreements instead of contracts were to blame, claimed researchers from the CRESC at the University of Manchester.
“Supermarkets have delivered shareholder value and low prices to consumers, but British pig producers and processors have lost out,” they said. Profits in the sector were so low that investment was largely impossible, meaning British suppliers were often unable to compete with Danish and Dutch suppliers, they added.
The government needed to encourage vertical integration in the style of Morrisons, which was on track to become the UK’s largest food processor. “Its model aligns the interests of firm, supply chain and society through directly-owned processing plants,” the report said.
The government needed to change its approach to competition policy and create tax incentives to get the other three supermarkets to embrace vertical integration, they added. It was also vital to further encourage producers to collaborate through co-operatives, and to increase powers for the Grocery Code Adjudicator to enforce contracts.