Sainsbury's extends pig premium until August

Sainsbury’s has extended its pledge to pay British pig farmers an extra 3p/kg until the end of the month, despite the deadweight average pig price (DAPP) rising above the limit it set initially.

In May the supermarket promised an additional discretionary payment of 3p/kg until either the DAPP reached £1.50/kg or until 1 August. It has now decided to continue to pay the premium even though the DAPP reached £1.50p/kg on 6 July. 

The supermarket said that it wanted to ensure that its Pork Development Group farmers are supported while costs are high. The discretionary premiums are paid on top of the existing agreement that each producer has with their processor.

A spokesman said: ”No other grocery competitor has made a move on this scale.”

In response to the latest announcement, National Pig Association (NPA) chairman Stewart Houston said: “I want to know why this mythical £1.50 is important when the cost of production is more like £1.64. Even then, that’s just breaking even and doesn’t even start to fill the black hole, or provide anything for future reinvestment. If the DAPP moves backwards, we’re just increasing the deficit.”

“All the retailers have put prices up in store in reaction to higher cost of production, but to date, none of the money has made its way back to the producers.

The payment prompted a withering response from Houston in May, when he criticised the supermarket for announcing that the premium would be 5p/kg, which included 2p/kg already being paid by processors. He called it a cosmetic gesture that did not address the problems suffered by pig producers. He said that to return to profitability, British pig producers need the DAPP to rise to around £1.70/kg.

With grain and cereal prices remaining volatile after one of the driest springs on record, the recent straw shortages have exacerbated the high cost of feed and bedding. Although a recent survey conducted showed that wheat and oilseed rape plantings for 2011 were up on last year, the availability of feed and bedding material for the coming season will largely depend on the quality of the UK crop.

>NPA chief blasts supermarkets

>Sainsbury’s increase support for British pig farmers

>NPA warns of straw shortages