Vion builds airbag in pig price

Meat processor Vion is making changes to the Price Index Guarantee System (PIG), which should guarantee that pig farmers are paid a competitive price. The main change is that Vion will now limit the maximum additional payment to 1,5 cents per kilo.

Due to the volatile meat markets, Vion has been struggling for some time with a guaranteed price system within its own chain programme Good Farming Balance, where they say 75% of the offer is paid out. In September, the slaughterhouse therefore decided to remove the German pig price (VEZG) from the basket of quotations to delete. This is because the pricing on the German pig market had taken on a life of its own and no longer corresponded with other countries. These measures led to considerable criticism in the sector, because it was financially disadvantageous for pig farmers. In the spring of 2020, shortly after the outbreak of the corona pandemic in Europe, Vion interrupted the guaranteed price also rose when the meat market was very erratic.

To prevent such measures in the future, Vion has now decided to limit the maximum supplementary payment from 2023 to one and a half cents per kilo. According to the slaughterhouse, this supplementary payment is above average, looking at the level of supplementary payments in previous years. The supplementary payment for 2022 is currently at 2,7 cents per kilo, which is exceptionally high according to Vion. This additional payment is probably too much of a financial burden, all the more so because Vion plunged into the red again last year. By limiting the supplementary payment from now on, Vion is actually building in an airbag that absorbs the blow if the market takes a turn for the worse. The basket of quotations in the new year will remain the same as this year, which means that the German pig price will count again. Spanish, Danish and Belgian quotations are also included in this basket. 

CO2 reduction
Vion also announces that it is committed to reducing CO2 indoors Good Farming Balance. To encourage pig farmers to commit themselves to making the pork chain more sustainable, Vion will work with a sustainability incentive linked to performance with regard to CO2 reduction on the farm. The exact details of the sustainability bonus have not yet been announced.

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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