News Good Farming Balance
Little enthusiasm for a fixed pig price at Vion
At the moment there is hardly any interest in the long-term pig price (LTP) that Vion launched at the beginning of last year. Instead of hedging the downward price risks, pig farmers now mainly want to take advantage of the sharp rise in weekly prices.
The fact that Vion has been offering the long-term price since 2018 can certainly be called revolutionary. This price is part of 'Good Farming Balance† The pig market has traditionally been dominated by weekly prices, which sometimes have an erratic character. The long-term price is the stable counterpart of this. Closed pig farms can minimize the price risk in this way by also recording their feed prices.
A tour of various producers and traders shows that they are currently not fixing the pig price for a longer term, but are consciously opting for the weekly price. The low enthusiasm for the concept is also recognized by Vion.
Record high weekly prices
Koen van Bergen, the director of Livestock and Supply Chains at Vion Pork, is not surprised by this. Due to the outbreaks of African swine fever in China, pig prices in the world have risen sharply. The Vion weekly quotation even equaled the record from 2013 in mid-August. In this way he can understand that the pig farmers are less willing to commit their yields. In the case of downward quotations, the movement is probably the other way around, Van Bergen expects.
Despite limited interest, Vion will continue to offer the long-term price. The LTP system has a long-term scope. The experiences gained in the past 1,5 years are used to further develop the system. The meat company does not want to say from a competitive point of view how many pig farmers have participated in the previous period. Van Bergen does let you know that, of the participating suppliers within Good Farming Balance, approximately 85% opt for the Price Index Guarantee Concept (PIG). They are guaranteed a competitive pig price, based on a number of European quotations.
Historical feed profit
The basis for determining the long-term price is the historical feed profit. This concerns the average feed profit per pig delivered over the past 12 years. The height of the LTP is based on the MAS Index and is only communicated to the participating pig farmers per period. Through the link with the index, the group offers pig farmers the opportunity to realize an average historical feed profit.
A participating pig farmer says he is not currently participating, because the long-term pig price is based only on historical data. For example, the 'African swine fever premium' is not included in the price. Nevertheless, several participants express their satisfaction with the system.
Wouter Job
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