pork joint

pork prices are continuing to fall - and it could be some time before they start to recover.

Increased UK supply - primarily due to improved production resulting in heavier animals - has pushed down the price of pigs. Latest Bpex figures, for December 2014, show pigs at 147.3p per kilo, down from 167.2p 12 months previously. And industry insiders say prices have since fallen further.

The impact of the situation was highlighted last week, when meat supplier Cranswick reported a 3% dip in underlying revenue in its Q3 results as volume growth was offset by ­deflation in sales revenue.

The decline in pig prices has been reflected in retail prices and, with the exception of mince, all cuts of pork are now cheaper than they were a year ago. Shoulder roasting joints have been hardest hit, falling 12.7% year on year to £3.35 a kilo in the 12-week period ending 4 January - and down almost 17% year on year over the four weeks to the same date.

Retail prices have also been impacted by changes in promotional strategy, suggests Sukhvinder Gill, consumer insight manager at the AHDB. “there is some evidence that retailers have shifted away from volume-driving x-for-y offers in favour of straight price reductions, partly in order to compete with the discounters,” he says.

The retail price drops appear to have driven sales, with overall pork volumes static in the year to 4 January 2015 compared with a 2.5% decline [Kantar Worldpanel] in the year to 4 January 2014. Value sales, however, are down 4% year on year versus a 2% increase the previous year.

It is expected supply levels will remain high, but there are hopes a mooted lifting of the Russian import ban on EU pig products could ease the pricing situation as Russia was the EU’s biggest export market.

“Reopening trade could make a big difference,” says AHDB market specialist manager Stephen Howarth, although he warns the price gap between EU and UK pig prices - which has been widening - would need to narrow “significantly.”

In the meantime, there is little sign of farmers planning to leave the pig industry despite the current declines. Low feed prices - which account for up to 65% of the cost of pig production - have eased pressure and, despite pig prices being at their lowest for four years, they are still well above levels in the mid-2000s, says Howarth.

retail pork prices