Better contracts for pig producers may come from consultation

The government is considering intervening in pig sector contracts, using powers contained in the 2020 Agriculture Act, to address possible unfair trading practices.

In a consultation on contractual practices launched on Friday (15 July), the government acknowledges pig producers have been facing challenging times, caused by a declining export market and a lack of skilled butchers in processing plants.

Despite various measures introduced by Defra and the devolved administrations, such as the temporary visa scheme for 800 butchers and private storage aid, more may need to be done, says the consultation.

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“Pig producers in the UK tend to be small, individual businesses,” it says. “Typically, these producers are supplying highly consolidated businesses further up the supply chain who command substantial shares of the market.

“This disparity can make pig producers vulnerable to unfair trading practices.”

The consultation, which covers all parts of the UK, points to a possible lack of transparency between processors and producers, and suggests a “more consistent approach may bring positive benefits”.

Evidence

It therefore aims to gather evidence about current supply arrangements in the pig sector, with a range of questions about types of contract, how they operate, and how they might be improved.

Issues of transparency, flexibility, pricing, dispute resolution and consolidation are all addressed in the 20-page online document.

Depending on the outcome, the government says there is the possibility of introducing regulations “to oversee the relationship between producers and buyers, where necessary”.

“Any interventions will be designed to ensure farm businesses can engage in smart business planning and risk management, supporting a competitive and resilient sector that delivers for producers, consumers, and taxpayers,” it says.

Response

The National Pig Association said the consultation was “hugely welcome” and something it has been requesting for many months.

“It is important everyone across the supply chain gets involved, to deliver an outcome that works for all,” said senior policy adviser Charlie Dewhirst.

“We’d like to see better contracts for producers that puts them is a stronger negotiating position, rather than bearing the brunt of the current market difficulties.

“Currently, there is such a wide array of contracts. We’d like to see a mandatory framework from government – similar to the dairy sector. It does not need to be very detailed, but needs to ensure everyone is on a similar footing and gives producers at least some comeback.”

The consultation, which is open to all stakeholders in the pig supply chain across the whole country, will run until 7 October 2022.