Contractual Practice in the UK Pig Sector

Overview

The pig sector has seen significant challenges in recent years. An oversupply of pigs arising as a result of rapidly declining export demand by China, and the lack of skilled butchers in processing plants was compounded by the outbreak of Covid-19 and led to a significant backlog of pigs on farms.  

Various key measures were put in place in response to these challenges. In the UK, the government launched a temporary visa scheme allowing up to 800 skilled butchers to enter the UK for a maximum of 6 months, on top of existing provision for butchers in the Skilled Worker route. In England, a Private Storage Aid Scheme opened enabling processors to place non-butchered and butchered pigs into frozen storage for a period between 2-6 months before allowing the product to re-enter the market at a later date. A Slaughter Incentive Payment Scheme was also launched to incentivise processors to increase the throughput of pigs through abattoirs by paying a £10 payment per pigs kills in shifts additional to the processors normal working patterns. Up to 100,000 pigs are able to be slaughtered under this scheme. The government is also working closely with AHDB to both expand existing exports and to identify new export opportunities, particularly for lightly processed pig meat. In Northern Ireland DAERA announced a support scheme worth up to £2m for pig farmers who have been financially impacted by the effects of weakening markets, increased feed costs and getting pigs moved off the farm for slaughter, which was launched in  May. The Scottish government have also put measures in place to aid the sector at this time with a Private Storage Aid Scheme and a pig hardship fund for pig producers.  

We recognise that more may be done. Stakeholders have suggested there is a lack of transparency between processors and producers, and that a more consistent approach across processors may bring positive benefits to the sector.  

This is a UK wide consultation, undertaken by DEFRA with the agreement of the Scottish Government, Welsh Government and DAERA. Any further action in response to the findings of this consultation will be discussed and agreed with the Devolved Administrations.

Why your views matter

The purpose of this consultation is to gather evidence about how supply arrangements in the pig sector currently function and to explore the nature of the relationships between the various parties in the supply chain. It is also seeking views on whether the functioning of the supply chain can be improved.    

Pig producers in the UK tend to be small, individual businesses. 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 Agriculture Act 2020 introduced the ‘Fair Dealings Powers’ which are designed to address any unfair practices, enabling Government to introduce regulations to oversee the relationship between producers and buyers where necessary.  

Any interventions in the pig sector following this consultation will be designed to ensure farm businesses can engage in smart business planning and risk management, supporting a competitive and resilient sector that delivers benefits for producers, consumers, and taxpayers. 

What happens next

Responses received by 7 October 2022 will be analysed and taken into account by all UK administrations in considering the measures necessary to improve transparency in the pig sector. Responses will be made available to the relevant teams of policy officials in the Devolved Administrations, who may share analysis and conclusions with senior colleagues and Ministers.

A summary of responses to this consultation will be published on the UK Government website at: www.gov.uk/defra. An annex to the consultation summary will list all organisations that responded and what part of the UK they represent but will not include personal names, addresses or other contact details.