ONE OF the largest pig breeding companies in the UK has been forced into administration by a combination of low pig prices and high feed costs, writes Ewan Pate, the farming editor.

DRS Pigs and MCB Sow Company have jointly kept a massive 6100 sows in Yorkshire and surrounding counties.

The breeding herd and over 50,000 progeny pigs at any one time have been kept on outdoor systems by over 90 separate contract breeders and finishers, all of whom will face an uncertain future unless the business can be sold.

The companies have debts totalling £3 million, with HSBC Bank and feed company Associated British Nutrition.

Robin Traquair, chairman of the NFUS pigs committee, said yesterday, “The pressure on the industry is enormous and this latest news is a real blow.

“The financial outlook for the sector was not good even before the massive feed price rises.

“There are many producers across the country questioning how long they can stay in business.

“This was a company involved in outdoor pigs—welfare-friendly systems that are supported by consumers and encouraged by supermarkets.

“However, these same supermarkets are pushing businesses over the cliff if they demand costly systems but won’t deliver an adequate return.

“The pigs industry is a lean, efficient operation.

“It is not as though the market is clearing out inefficient businesses, it is actually failing to reward entrepreneurialism and the very businesses that are responding to consumer signals.

“That is a hugely dangerous trend.”

Gordon McKen, general manager of Scottish Pig Producers Ltd, the marketing co-operative which handles 65% of the country’s pigs, also reacted strongly to the news.

“We have been bashing on the supermarkets’ doors for months warning them about what would happen if prices failed to rise,” he said.

“Their answer has been to say ‘so what?’ but with that attitude, making noises about building a meaningful food chain becomes irrelevant.

“It is particularly upsetting that this Yorkshire company has been doing what they have been asked to do by producing free-range outdoor pigs and then not getting paid enough for doing the job.

“However, the reality is that no one, whether they are producing pigs inside or outside, is getting paid.

“We are competing with continental producers using intensive indoor systems to produce 26 pigs per sow.

“We need a premium to be able to compete with our higher welfare systems, but nobody is paying it.”

Average production per sow in Scotland is around 21 pigs per sow.

However, Mr McKen is beginning to pick up signals which might mean a return to profitability for those pig producers who can survive.

“It will be no use buyers scuttling off to the continent to look for pigmeat once domestic supplies run short, as they surely must,” he said. “Cull sow numbers in Germany, Holland and Denmark are up 6% on the year.

“Of these, Holland appears to be culling hardest.”

There is also an interesting new trading situation developing between Poland, a major producer, and Russia, a major consumer.

Due to a political spat the Russians had banned Polish pigmeat, which was then diverted into western Europe.

Now 29 Polish companies have been granted permission to resume trade with Russia.

There may be a downside to this because in the interim Brazil has been supplying Russia and some of that tonnage will be displaced.

“One major factor is the strength of the euro compared to the pound,” said Mr McKen.

“That is an absolute winner for us at the moment.

“I am encouraged because cull sows from Scotland are still moving south this week at a time of year when that market normally dries up.

“The price for these sows is now back to two thirds of what it was before foot-and–mouth movement restrictions destroyed the market.”

There are undoubtedly some positive signs on the horizon but it will come as little comfort to the contract farmers and other creditors of DRS Pigs and the MBC Sow Company.

The directors of the joint company are reported to be deeply upset that they have been unable to find the support needed to carry on until such times as these market signals translate into higher prices.

If the business fails to sell and the infrastructure which supported it has to be dismantled it is extremely difficult to see how it could be replaced without problems.