Uncertainty brought about by Britain’s decision to leave the European Union means pig producers everywhere must plan carefully to ensure their business’ economic sustainability, experts say.
For British producers, locking in prices and recognizing opportunities arising from Brexit is key, consultant Peter Crichton told Farmers Weekly.
While the weakened pound is supporting pig prices, feed is more expensive, with the price of imported soya meal leaping more than £30 ($40) per ton since the vote, he said.
To get a better grip on price volatility, fixing prices for inputs and outputs could make sense for many pig producers.
“The weakening pound has assisted pig prices across the UK which may allow producers the opportunities to negotiate better deals with abattoirs,” he added. “Some abattoirs are prepared to talk about fixed price contracts. It gives producers a level of security.”
Meanwhile, the weak pound increases the cost of imported meat, while adding value to British exports, Crichton said.
Post-Brexit, UK producers could focus on producing premium pork and reminding producers about the high welfare standards of British pig meat.
Pricier pork from the United States
For US pig producers, the strengthening of the US dollar post-Brexit makes US pork more expensive around the world, Purdue University Extension economist Chris Hurt told FarmNews.com.
While little US pork is exported to the EU — only 0.2% was sent there in 2015 — the dollar’s 3.5% rise against the Euro since the vote means that US-origin pig meat will increase prices and exports will take a hit.
The EU has been the world’s largest exporter for the last two years, giving countries that use the Euro an immediate price advantage over US pork, Hurt stated.
“Said another way, Brexit gives our biggest global pork competitor a sizeable and immediate price advantage,” he added.
“The longer-term economic implications of Brexit may be the most important and could reduce the rate of world economic growth.
“If Brexit does slow world income growth, it could be negative for global sales of pork and other US agricultural products.”