Consultation outcome

Summary of responses and UK government response

Updated 6 April 2023

Introduction

Between July and October 2022, Defra, with input from the devolved administrations, conducted a public consultation exploring contractual practice in the UK pig sector. The consultation aimed to understand whether contract reform could provide greater certainty to both pig producers and processors, by improving access to data and ensuring that clear terms and conditions are established in agreements. The consultation first invited views on whether legislation in this area was needed, before a more detailed series of questions covering topics such as the use of pricing data and typical components of pig sale agreements.

This report summarises the responses received and sets out proposed next steps. 374 responses to the consultation were received (364 responses to the online survey, and 10 email responses). Not all respondents answered every question, and where charts or statistics are included in the summary, the data represents only those who responded to that question.

About the respondents

Where responses included the name of an organisation these are listed in Annex 3. The largest number of responses came from respondents who identified as ‘an independent producer’. We received proportionally fewer responses from those identifying as ‘an integrated producer’, as well as an ‘abattoir’, ‘secondary processor and ‘a representative organisation’. Of those identifying as ‘a representative organisation’, 74% represented producer interests and 17% represented processors and abattoirs.

We have received good responses across each part of the UK, given the size of their respective pig industries.

Proportion of respondents in each category (online survey responses)

Category of respondents	Percentage
Independent producer	61%
Other (general)	15%
Other (multiple functions)	10%
Representative/trade organisation	5%
Marketing group	3%
Integrated producer	3%
Abattoir	1%
Retailer	1%
Secondary processor	1%
Wholesaler	0.3%
Co-operative	0.3%

Business location of respondents (online survey responses)

Location of respondents	Percentage
England	66%
Northern Ireland	14%
Scotland	12%
Wales	0.3%
Other (across the UK)	8%

Consultation responses and feedback

General feedback

1. Do you feel comfortable sharing your opinions and experiences related to the pig supply chain as part of this consultation?

80% of respondents feel comfortable sharing their opinions and experiences. Of those, 27% note their desire to help create change in the industry and others suggest that current supply chain practices are dysfunctional.

Independent producers (rearing pigs for onward sale) were the most likely to be uncomfortable sharing their experiences: 24% of independent producers answered ‘no’ to this question. The most common reason for this was a fear of commercial retaliation, a theme noted by 69% of independent producers who answered this way.

Type of agreement

2. As a producer, with whom do you make your sale agreement?

65% of producers enter into a sale agreement with a marketing group. Some of these producers note that their marketing group then deals directly with the processor, acting as a middleman between producer and processor.

23% of producers enter into a sale agreement directly with a processor. Of these respondents who are a member of a marketing group, some indicate that their marketing group provide general support or advice on this agreement, even in instances where it is made directly with a processor.

3. What type of sale agreement do you have?

Type of sale agreement	Percentage
Verbal	24%
Written (updated in writing)	42%
Written (updated verbally)	24%
None	4%
Don’t know	6%

Written agreements are the most common type of agreement used by respondents, accounting for 66% of all agreement types. 4% of respondents state that they had no formal sale agreement, neither verbal or written. 6% of respondents do not know what type of contract they hold.

When comparing independent and integrated producers, roughly the same proportion of both utilise written agreements.

4. We are keen to understand more how alterations to an agreement are made. Please provide details related to the frequency of changes, the negotiations involved and who typically initiates this process.

There are mixed opinions regarding how alterations to an agreement are made and communicated. Some responses indicate that the alterations are initiated by a processor, with little or no opportunity for the producer to negotiate these new terms:

Alterations to agreement are typically initiated by the processor whether fluctuations in pig numbers or an increase in meat processing charges. These are often not open to negotiation and are imposed without the ability to contest or vary due to the size of the processor v[ersus] me as a small producer.

Some respondents note that alterations are typically requested in writing, or initially made verbally and then followed up in writing. The approach is seemingly determined by whether the processor communicates directly with the producer or via a marketing group, with changes communicated via marketing groups made in writing from the offset.

Responses from processors suggest that written agreements have clear notice periods and either party to the agreement can seek to alter the agreement, so long as that notice period is fulfilled.

5. Even though my sale agreements are verbal, this constitutes a legally binding contract that must be adhered to. If you have a verbal agreement, to what extent do you agree with this statement? Please give reasons for your answer.

Response	Percentage
Strongly agree	32%
Agree	34%
Neither agree nor disagree	8%
Disagree	12%
Strongly disagree	10%
Don’t know	4%

66% of respondents agree that a verbal agreement is a legally binding agreement, although many respondents suggest that verbal agreements pose challenges. Of those that responded, 21% believe that verbal agreements do not work in practice, with little proof of either the agreement or the terms and conditions it contains.

Many respondents who disagree with the statement suggest that processors do not adhere to the terms of a verbal agreement, with few highlighting the recent challenges facing the pig sector as an example of this:

Effectively it is not a contract, it is an agreement to supply. If they don’t want our pigs, they don’t take them. We often hardly even get an explanation never mind any financial compensation. Usually, as a result the pigs are out of spec[ification] the following week and they then get them cheaper.

Responses from processors indicate that, while verbal agreements are legally binding, the most important aspects of an agreement should be confirmed in writing to ensure that these terms are clear to both parties.

6. To improve transparency within the sector, all sale agreements between producers and purchasers should be covered by a written agreement. To what extent do you agree with this statement? Please give reasons for your answer.

Response	Percentage
Strongly agree	57%
Agree	32%
Neither agree nor disagree	6%
Disagree	6%
Strongly disagree	1%
Don’t know	1%

89% of respondents either agree or strongly agree that all sale agreements between producers and purchasers should be covered by a written agreement. Three quarters of these respondents believe it will provide producers with more security, although a few respondents indicate that flexibility is needed for special, shorter-term agreements.

Some respondents also mention that written agreements provide better proof and are therefore the best way an agreement can be enforced. However, some other responses suggest that written agreements are too restrictive for smaller sized companies.

The number of responses from those identifying as a ‘secondary processor’ or ‘abattoir’ was very limited, although almost half of those responding support the statement (as shown by the graph below). Their responses refer to heightened security for both parties and good business practice.

Responses by abattoirs and secondary processors only:

Response	Percentage
Strongly agree	25%
Agree	25%
Neither agree nor disagree	25%
Disagree	13%
Strongly disagree	13%
Don’t know	0%

7. My sale agreements are always honoured. To what extent do you agree with this statement? Please give reasons for your answer.

Response	Percentage
Strongly agree	9%
Agree	14%
Neither agree nor disagree	12%
Disagree	23%
Strongly disagree	41%
Don’t know	1%

41% of respondents strongly disagree and 23% disagree with the statement that their sale agreements are always honoured.

Almost half of responses indicate that processors do not honour contracted numbers and regularly ‘roll’ pigs, meaning they are subject to short-notice collection changes or delays. 20% of answers also specifically mentioned that pre-agreed prices are not always honoured by processors. Some also note an imbalance of power in the supply chain and express their concern that risk is unfairly put on producers.

Some respondents mention that they had good business relationships and that overall the system works: which included both those who deal directly with processors and those who are members of a marketing group Others noted that extreme market conditions, such as coronavirus (COVID-19), can have a significant influence on whether agreements are abided by or not.

Contents of agreement

8. All sale agreements should follow a set structure and include reference to the same terms and conditions. To what extent do you agree with this statement? Please give reasons for you answer.

Response	Percentage
Strongly agree	31%
Agree	38%
Neither agree nor disagree	19%
Disagree	6%
Strongly disagree	2%
Don’t know	4%

69% of respondents are in favour of all sale agreements following a set structure and including reference to the same terms and conditions.

Some respondents believe a set structure will provide more security and fairness for producers in particular, and improve transparency and consistency across the industry as a whole. The need for flexibility is a key theme and 21% of responses suggest that any structure should be seen as a minimum, baseline framework to allow for any market changes.

A few responses also mention that there is no appropriate ‘one size fits all’ structure and, although some of these respondents agree a structure is needed, they felt that this should depend on the size and nature of the business:

A broad sweeping brush won’t allow for subtle differences between contracts at different locations, with regards to spec[ification], weight, numbers, volume etc. But the bones of making changes or notice periods needs to be standardised.

The view from Northern Ireland demonstrated a higher level of uncertainty, with 44% of respondents neither agreeing nor disagreeing that there should be a set structure.

Of those that disagree, reasons included industry volatility and a belief that parties should be free to decide terms themselves.

Within the ‘secondary processor’ and ‘abattoir’ category, half of respondents disagree with the statement. A common sentiment from all respondents, however, was that any regulation should allow flexibility and not be overly prescriptive, particularly where the nature and size of businesses differ.

9. Legislation, rather than a voluntary approach, is needed to ensure that this sale agreement outline is consistent across the supply chain. To what extent do you agree with this statement? Please give reasons for your answer.

Response	Percentage
Strongly agree	41%
Agree	33%
Neither agree nor disagree	15%
Disagree	6%
Strongly disagree	2%
Don’t know	3%

74% of respondents agree that legislation, rather than a voluntary approach, is needed to ensure sale agreements are consistent across the supply chain.

Of those that agree, many cited reasons such as a lack of trust between producers and processors, an imbalance of power and processors not adhering to existing agreements. 20% of these respondents suggest that legislation is the only way to ensure positive behaviours are upheld.

Some respondents reference a need for flexibility and believe that legislation should not necessarily be targeted towards smaller or more niche businesses.

Many respondents who disagree with the statement believe that the market should self-regulate and that the consistency of standards should be left up to individual businesses rather than government. A third of these responses also express scepticism about whether legislation will work in practice and some express concern around overly prescriptive regulations:

We do want to achieve a level playing field in this sector and understand the case for legislation, but an overly detailed, full legislative package has the potential to tie companies to something unsuitable for long periods of time and thus make them wary to do business. Too much red tape can lead to a perception that everything is legislated for, yet may lead to divisions and fractures in a sector where the players have more in common in terms of doing business than is sometimes perceived.

Responses from secondary processors or abattoirs are fairly evenly split: 44% agree with the statement, while 44% disagree and 11% neither agree nor disagree. There was a distinction between processors in different regions, with the majority of those in Scotland and Northern Ireland disagreeing with the statement.

10. Are there any clauses which should be mandatory within any sale agreement? Please provide details.

This question aimed to gather views on clauses of sale agreements that should be mandatory in legislation.

Over half of responses believe the minimum number of pigs to be supplied should be included, including responses from those identifying as secondary processors or abattoirs, although many suggest this be a minimum figure: respondents recognise a need for flexibility and clearer communication on both sides. Over a quarter of responses mention the inclusion of a price or pricing structure, while some specify the need for clear payment terms, such as payment dates. A common theme throughout responses mentioning price is cost of production and how this should be more closely linked to the price a farmer receives. Respondents note that this is particularly pressing given rising costs.

Other clauses regularly mentioned by respondents include notice periods and termination, supply periods, premiums and deductions, and dispute resolution.

Several respondents feel that force majeure clauses should be mandatory in a sale agreement, but that these should be more clearly defined with specific definitions to prohibit either party from taking advantage.

11. Are there any clauses which should be prohibited within any sale agreement? Please provide details.

Acceptance of pre-agreed pig numbers is a main concern among respondents. Many wish to prohibit a processor changing the number of pigs they will accept at short notice. A few respondents recognise that flexibility is required by processors and suggest volume tolerances to satisfy this need, while ensuring the number of pigs taken remains a satisfactory number for producers.

Other respondents seek an end to ambigious pricing terms, with some respondents noting that they can receive a negative price for their carcass. Such respondents seek to prohibit a carcass recieiving a zero or negative value following deductions, especially in instances where that carcass still enters the food chain.

Some respondents state that no clauses should be prohibited. This is the sentiment among a few secondary processors and abattoirs, who suggest that agreements should be freely negotiated by both parties.

12. Should changes to the sale agreement be permissible?

79% of respondents believed that changes to sale agreements should be permissible.

13. If yes, we are keen to hear your views as to which changes to the sale agreement should be permissible, and the process by which sale agreements should be changed. Please provide details.

While some respondents suggest that changes should only be made in exceptional circumstances, many respondents believe that alterations should be allowed as long as they are agreed by both parties with 34% of responses mentioning the inclusion of a pre-defined minimum notice period. This sentiment is consistent across both producers and secondary processors, with the latter noting the importance of market flexibility. Responses indicate that any notice period must be included within the sale agreement before it is signed. Although not all responses indicate an appropriate notice period, between 6 to 12 months was the most common response among those who do reference a duration.

A number of responses indicated that all requests to change the agreement must be made in writing to the other party of the agreement. Any agreed change should then initiate the issue of a new, updated written agreement.

Formation of price

14. The factors which make up the contracted price to be paid for an animal are clear and transparent to both parties of the agreement. To what extent do you agree with this statement? Please give reasons for your answer.

Response	Percentage
Strongly agree	29%
Agree	28%
Neither agree nor disagree	11%
Disagree	14%
Strongly disagree	14%
Don’t know	4%

57% of respondents agree that the factors affecting price are clear, although written responses indicate this agreement is not consistent across all factors affecting price.

Public indices, mainly the Standard Pig Price (SPP), are found to be transparent and easily understood. Some respondents note that a processor’s ‘shout price’ is more ambiguous as it is currently dictated by the processor with little explanation:

The basic parameters determining the pig price paid by the abattoir to the producer are weight and estimated back fat which are broadly understood by all parties. The specific pricing mechanisms in a sales agreement may vary considerably and be extremely complex to follow or understand…This may make it advantageous for supply chain partners to manipulate prices in their favour.

Many respondents would like to see more transparent and accessible cost of production figures, although there is recognition that these figures are often complex to establish and could be manipulated.

Respondents wish to see improved communication across the supply chain to enable a better understanding of pricing factors.

15. We are keen to hear views about the factors that currently contribute to contracted prices (for example: market indices such as the Standard Pig Price, All Pig Price or Tribune Spot Bacon Average, weekly contribution, cost of production etc.) including whether other factors would be preferable. Please provide detail in your answer.

There are a varied range of factors which currently contribute to contracted prices.

Many respondents use either the All Pig Price (APP), SPP or Tribune market indices. A few respondents suggest that while these indices are commonplace, their intended use is not as a pricing metric and they should not be used as such.

Respondents from Northern Ireland reference issues with the SPP, including the possible manipulation of price.

Of those respondents using either the APP or SPP, many utilise a ‘SPP+’ price, where the SPP is supplemented by other factors, such as the processor’s shout price. It is suggested that the SPP is generally clear and easy to follow, while the processors own contribution is difficult to understand as it is administered with little or no detail.

Premiums and deductions

16. The premiums and deductions which can be applied to the price paid per pig are clear and unambiguous at the point of sale. To what extent do you agree with this statement. Please give reasons for your answer.

Response	Percentage
Strongly agree	17%
Agree	40%
Neither agree nor disagree	14%
Disagree	12%
Strongly disagree	8%
Don’t know	9%

Over half of respondents believe that premiums and deductions are clear, and it is regularly noted that the producer is aware of the terms before entering into the agreement. Despite this, written responses suggest that complex arrangements are relatively commonplace.

Some respondents argue that whilst deductions are clear, premiums are often more ambiguous and often not passed on to the producer. Other producers believe that general communication from processors could be improved to generate greater trust between both parties and give confidence to producers that deductions are being applied fairly:

The deductions are clear, but information producers get back regarding why certain pigs have been deducted is not always forthcoming. This puts doubt in producer’s minds so this needs to be clearer from the processer each time it occurs.

Many producers note the recent backlog of pigs and state that, in instances where an abattoir failed to take pigs on the pre-agreed date, producers then faced deductions due to the carcass being overweight. Producers ask for an end to this practice:

Deductions are clearly stated in the contract; the unfairness came in when due to the backlog pig weights increased dramatically and we were penalised heavily through no fault of our own.

Some respondents indicate that the lack of consistency among processors is challenging, and a few would prefer to have consistent premiums and deductions across the whole sector.

Reporting and transparency

17. Existing market reporting services provide a high level of transparency. To what extent do you agree with this statement? Please give reasons for your answer.

Response	Percentage
Strongly agree	5%
Agree	14%
Neither agree nor disagree	23%
Disagree	34%
Strongly disagree	16%
Don’t know	8%

50% of respondents do not believe existing marketing reporting is transparent, which was a consistent trend across responses from independent producers. Responses from marketing groups and representative organisation are less decisive.

A common theme across many responses was that existing reports, while easy to access and understand, are voluntary and so do not cover the whole pig market. Many respondents raise concerns that such an approach is open to manipulation and the data can be skewed to deliberately generate a lower price point:

Existing price reporting can be easily manipulated by processors through contract structures and influencing the ‘basket’ of pigs included in such schemes.

Respondents from Northern Ireland highlight that existing data sets, specifically the SPP, often exclude pigs from Northern Ireland, limiting their usefulness in that market.

Some respondents, primarily independent producers and representative organisations, state that some data is difficult to obtain and understand. While the Standard Pig Price is generally well-understood, some comment that the Tribune price is less clear and there is uncertainty about how it is established.

A small number of respondents mention issues relating to forward planning and note that existing reporting relies on past data, subsequently making the information outdated which compromises the ability to react quickly to changing market conditions.

Of those who agree, some comment that reporting services work well as they are, particularly those reporting services linked to the Agriculture and Horticulture Development Board (AHDB).

18. Should any additional data points from the first stage of the supply chain (between producer and processor), that are not currently provided, be made available to [the relevant authority]? Please give reasons for your answer.

60% of respondents seek additional data points from the first part of the supply chain. Within this, there was a wide variety of data that respondents suggested will be beneficial.

16% of respondents wish to see the SPP expanded to incorporate more pig types and breakdown the data to a more granular level, showing information about processor owned pigs, outdoor-reared pigs and organic pigs. These respondents argue this would generate a pig prices which are more reflective of the entire UK market. A large majority of respondents from Northern Ireland note their desire to be included within market reporting services.

Some respondents request that the total slaughter numbers of all abattoirs in the UK is made available, including a split between the slaughter of independent and integrated pigs.

Other respondents wish for more information regarding cost of production across the sector, from producer to processor. Increasing feed and energy costs were regularly referenced and respondents would like to see these costs reported back into the supply chain. Some note that factors contributing to cost of production should be independently verified to ensure their accuracy.

As shown in the graph below, secondary processors and abattoirs have generally less need for additional data from the first stage of the supply chain, although there are suggestions that more information regarding the general herd size of the UK market would be useful.

Responses by abattoirs and secondary processors only:

19. Would any additional market reporting from other stages of the supply chain improve transparency? Please give reasons for your answer.

67% of respondents would like to capture additional data points from the rest of the pig supply chain. Multiple types of data points are mentioned.

Some respondents request better wholesale information, which they argue would enable a more robust understanding of the whole sector, including the comparison of UK pork versus imports:

From a market intelligence perspective, wholesale price reporting would be favourable (similar to the US), as this would allow prices to be reported for important cuts and then a formula applied to work out the average carcase ‘cut-out’ price.

20% of respondents mention their desire to understand the profit margins attained by each stage of the supply chain. Producers speak to this providing a better understanding of profit distribution, enabling them to assess what proportion of profits should filter down to farm:

Producers need to see the percentage of the shelf price that comes back to producers with price tracking on the main cuts. This would also give producers some idea of retailers using products as loss leaders as well.

Other respondents note that they would like more insight into consumer demand at a retail level.

Dispute resolution

20. Please provide your views on the most effective means of dispute resolution and whether this should be binding or advisory.

There is no consensus about the best approach to dispute resolution, including whether this should be binding or advisory. Roughly 20% of respondents would prefer a binding approach, with approximately 10% favouring advisory. Some respondents suggest a combined approach, with the option to move from advisory to binding if a producer wishes to escalate the dispute further.

A common trend throughout responses is that any form of dispute resolution, whether binding or advisory, must be undertaken by an independent third party to ensure it has oversight of the supply chain and can be trusted by all parties to the agreement.

Some respondents state that they would like a dispute mechanism to be an ombudsman or adjudicator, with the Groceries Code Adjudicator mentioned as a popular model:

There needs to be a level of independent arbitration. A body such as the Groceries Code Adjudicator could provide that independent arbitration if their scope was extended to cover producer to processor, or an alternative similar body be created…A body such as the GCA is needed, it needs to have sufficient teeth to be effective.

Other responses from producers raise a fear that processors may retaliate if they were to raise an issue and note that any dispute resolution should prevent this.

Impact on business and consumers

21. If new legislative requirements are introduced as a result of this consultation, are you aware of any impacts to business that could arise? Please give reasons for your answer, including any additional annual costs or savings for your business and any specific impacts in one or other parts of the UK.

There are mixed opinions regarding the potential impact to businesses.

Many respondents believe legislation will create a fairer supply chain for pig farmers by implementing consistent standards across the industry. Respondents state this will create a more stable production market, enabling better budgeting and business decisions.

Some respondents raised concerns that regulations would create additional bureaucracy through more paperwork and data recording. Certain producers also voice concern that there could be unintended consequences: agreements between a producer and processor may become more challenging to obtain, and imported pork, without any additional regulation, may become more attractive to processors and retailers as a result.

Some respondents feel that regulations will have no demonstrable effect.

Responses from those identifying as secondary processors or abattoirs are also mixed. Generally, smaller processors believed legislation could be beneficial and larger processors were concerned about regulations having an impact on the market, leading to adverse effects on both producers and processors in the UK.

22. Are you aware of any positive or negative impacts on consumers which could arise from the introduction of regulations in the pig sector? Please give reasons for your answer, including any expected impacts with regards to costs, choice, and transparency of production and processing standards.

There is a diverse set of responses regarding the potential impact to consumers.

Some respondents raise concern that the retail price of pork may increase, although these respondents tended to believe that any rise would be minimal and stated that pork would remain a relatively cheap protein source. It was also mentioned that prices could rise as a result of the absence of any interventions:

There will be no farmers left if this pricing strategy is allowed to continue […] if new regulations do not come into force the price is still likely to rise for consumers as so many farmers will have left the industry and there will be a huge shortage of pork products which will drive the price higher.

A common sentiment was that regulations which improve the position of the UK pig producer would, in turn, ensure that more pork products with strong animal welfare and environmental credentials are on-shelf for consumers to purchase.

Consolidation

23. Consolidation of pig processors has hindered the supply chain position of pig farmers. To what extent do you agree with this statement? Please give reasons for your answer and provide information on each area you feel is affected, both positively and negatively e.g., price, productivity etc

Response	Percentage
Strongly agree	54%
Agree	34%
Neither agree nor disagree	8%
Disagree	1%
Strongly disagree	1%
Don’t know	2%

88% of respondents believe that processor consolidation has hindered the position of farmers.

Many respondents attribute low pig prices to a lack of market competition: respondents comment that the reduced number of processors enables those in operation to maintain lower prices and force producers to be price-takers. This thought is consistent across all nations in the UK. This view is also supported by the many respondents who believe that consolidation has resulted in too much power in too few hands:

Control in so few hands is not healthy. Many, many small outlets have disappeared and choice of market for farmers is seriously limited because of this.

Many respondents note that the reduced number of local abattoirs has increased transport time and costs, with some producers only having one or two options of where to send their pigs.

Some respondents note that the effects of consolidation are worse for independent producers as integrated processors will ensure their own pigs are slaughtered first:

Processors have their own pigs now and will look after them first. Therefore there is a suspicion that independent producers will be paid a balancing price so the factory “basket” price is lower.

A few respondents noted that consolidation increases the negative effect of any production issues. Producers are concerned that if one of the larger businesses was to fall into trouble or have production capability challenges, the effect on the sector would be far greater than if there were multiple, smaller processors.

A lack of innovation in the sector is also seen as a negative effect of consolidation, particularly in Northern Ireland where respondents note there are very few processors available and specifications are the same across those processors.

Responses among secondary processors and abattoirs are mixed. Those who disagree suggest that consolidation is needed to maintain a competitive UK pig market.

24. Consolidation in the processing sector has limited the ability of pig farmers to specialise. To what extent do you agree with this statement? Please give reasons for your answer and provide information on any areas you feel are affected e.g., price, productivity etc.

Response	Percentage
Strongly agree	28%
Agree	29%
Neither agree nor disagree	25%
Disagree	8%
Strongly disagree	2%
Don’t know	8%

There is a consensus that consolidation has limited the ability of pig farmers to specialise. This belief is consistent across both independent and integrated producers and across all regions of the UK, particularly Scotland, where 83% of respondents either strongly agreed or agreed with the statement.

There are diverse opinions among those who agreed. Some note the reduction in local, smaller abattoirs that would have been a traditional outlet for different cuts and breeds. Larger processors are seen to only want pork cuts that enable economies of scale, with no desire to reduce volumes for alternative, smaller offerings.

Of those who disagree, some respondents feel that demand for each cut comes from the end customer in the supermarket aisle and if the demand for more specialised cuts does not exist, the market should not force it. Others state there is already opportunity to diversify under current market conditions.

Marketing groups

25. We are keen to hear your views about marketing groups and the role they play in the pig supply chain. Please provide detail in your answer.

Marketing groups are seen to fulfil various roles across the supply chain, particularly for smaller producers. This is noted by both producers and secondary processors.

Many respondents comment that marketing groups are well placed to act as a middleman, enabling efficiencies for processors and also managing the number of pigs flowing through the market. Some note that, during the recent pig crisis, it was the marketing groups who found new outlets for pigs not taken via their contracted abattoir. This is thought to be especially useful for independent producers.

Some respondents felt that the position of marketing groups has diminished over recent years as processors have consolidated:

Marketing groups give some power to the family farm but, in recent years with so few large retail processors, have lost the ability to play Peter against Paul and have become no more than a logistics office dealing with daily ebb and flow of numbers and sorting out payment details.

This trend did vary depending on geographical location with respondents from Northern Ireland viewing marketing groups positively.

Certain responses suggest there is a lack of trust between producer and marketing group, with evidence of instances whereby the producer felt let down by their marketing group.

Variation within the UK

26. Legislative regulations are often applied uniformly across all UK nations. Is there any reason why a different approach should be taken? Please give reasons for your answer.

45% of respondents answered no to this question. This question revealed that support for UK-wide legislation was the most popular view, although this was not a majority view.

Some responses highlight that the UK pig market operates as one market, with pigs often moving freely across borders. A few respondents suggest that different rules for different nations within the UK could undermine and complicate this movement. A few respondents also indicate that legislation applied only to certain parts of the UK could unintentionally disadvantage certain actors in the supply chain.

Responses are mixed across England, Northern Ireland and Scotland:

• 50% of those in England agree with a UK-wide approach
• 37% of those in Northern Ireland agree with a UK-wide approach
• 39% of those in Scotland agree with a UK-wide approach

39% of respondents do not know whether legislation should be consistent across the UK. The proportion of respondents who answered ‘don’t know’ varies across nations of the UK:

• 37% of those in England
• 50% of those in Northern Ireland
• 25% of those in Scotland
• 100% of those in Wales (1 response)

Many Scottish responses suggest that a different approach may be needed for Scottish businesses as Scotland has only 1 major processor. Scottish respondents ask for this to be taken into consideration when developing any legislation. Those in Northern Ireland indicate that Northern Irish producers face higher costs of production than those in other nations. Responses suggested these situations may need to be reflected in legislation.

Respondents answering ‘don’t know’ generally referenced a reluctance to comment on how legislation would work in areas they were less familiar with, especially when there is no certainty as to what the legislation will look like at this stage.

Other concerns

27. We are keen to hear your views on any other issues related to business relations in the pig supply chain that have not been covered by this consultation. Please provide detail in your answer.

Responses to this question touch on a diverse range of themes.

A third of respondents note their concern about imports and the impact of this on the farmer to retailer supply chain. Linked to this, many respondents reference animal welfare, in particular the Red Tractor assurance scheme, and suggest that imports are able to undercut British outlets as they do not have to fulfil these welfare requirements.

Some respondents mention supermarket labelling of pork, with a general consensus that improved labelling is needed to ensure that pork products marketed as UK-pork were actually reared in the UK:

I would like to see Labelling Legislation that states that if the produce is not reared to the UK’s legislative standards then this should clearly be publicised either on the front of the retail pack or clearly on a menu in a food outlet. I am more than happy to compete with imports but it has to be on a level footing.

Over 30% of respondents reference retailer issues in answer to this question. Respondents indicate that they believe retailers dictate the market, with retail pressure passed down via processors to farmers.

Qualitative responses indicate that producer and processor businesses face different levels of risk. While producers must have a contingency storage plan to allow for any backlog of pigs on farm, this is not something required or implemented by abattoirs when they have an oversupply of pigs to slaughter. As a result, storage risks typically all fall onto the producer.

28. How much time do you estimate would be required to implement any new legislation? Please give reasons for your answer.

Time required to implement new legislation	Percentage
12 months	48%
24 months	14%
36 months	3%
Don’t know	24%
Other	12%

Almost half of respondents favour a 12-month implementation period for any new regulations. Many of the producers favouring 12-months note that they would struggle to stay in business in current conditions and need regulatory intervention as soon as possible. This theme was particularly acute from Northern Ireland: over 50% of responses mention their concern about staying in business.

The preference for a 12-month transition period is consistent across producers and marketing groups, although processor representatives indicate that a longer transition period is needed. Of the processors who responded to this question, a minimum 12-month transition period is the preferred option, although some of the larger processors favoured a longer period.

Of those who answered ‘Other’, the most common timeline suggested was 6 months.

Government response: conclusions and next steps

The primary purposes of this consultation were to establish whether there are issues with fairness in the pig sector supply chain, assess whether interventions could improve this situation and explore the nature of any interventions needed. The responses received have demonstrated that there are legitimate concerns about the nature of business relationships in the UK pig sector. There is a clear demand for a legislative solution, and evidence of a popular sentiment that legally required written contracts would remove the uncertainty and ambiguity which has underlain recent issues.

There is a far weaker consensus regarding what mandatory written agreements should cover and whether these agreements should be standardised throughout the sector. A substantial number of responses stressed the need for a light-touch, flexible approach to any future legislation to account for the wide variation in business arrangements found in the sector. Producers also generally recognised that too much contractual rigidity could have unintended consequences on the market.

Some further key insights are outlined below.

Data accessibility and transparency

The consultation asked multiple questions on the transparency of data and whether additional data points, either from the first stage of the supply chain or elsewhere, would be beneficial. Responses revealed a picture of inconsistency in terms of the availability of supply chain data, with some areas well covered and others severely lacking. It was also regularly raised that a more complete picture of the supply chain – such as additional data points covering overall population numbers – would improve industry wide planning capabilities which could help avoid supply and demand imbalances in the future. There were also complaints that the limited granularity of the data currently collected means market reporting services are not always applicable to every business. For instance, responses from those in Northern Ireland note that their data is not included in the formation of the SPP and show a desire for this to be addressed.

Prohibiting one-sided behaviours

Throughout all questions, respondents regularly referred to recent issues in the UK pig sector and provided evidence of poor contractual practice, including where pre-agreed pig numbers were ignored and producers were penalised for circumstances outside of their control. Consultation responses strongly sought an end to these practices.

Consolidation

Response analysis revealed a strong statistical consensus that business consolidation in the processing sector has undermined the position of producers. Producers have communicated clear concerns that consolidation has limited local outlets and limited the success of niche products. There was a general sentiment that power was in too few hands and independent producers were suffering as a result.

Contingency planning

Responses suggest that there is an inherent unfairness in the imbalance of contingency requirements between producers and processors. Respondents suggest that all responsibility for dealing with unforeseen circumstances, and associated financial risk, is unfairly placed with producers.

UK-wide scope

The consultation included a question on the application of legislation across the UK. Among respondents there was a general consensus that any new legislation should be uniform across the whole of the UK, although a significant number of respondents were uncertain about this and there was wide acknowledgement that the market operates differently across nations. Responses from Scottish organisations highlighted the unique processor market in Scotland and requested that this is considered within any legislation, while responses from Northern Ireland indicated increased costs compared with the rest of the UK.

Dispute resolution

There was a strong consensus that action must be taken on dispute resolution, although various methods to achieving a successful outcome were referenced.

Next steps

• We will share our findings relating to the alleged negative consequences of market consolidation with the Competition and Markets Authority (CMA).
• The UK government will commence work developing regulations for pig contracts, using the regulation making power in section 29 of the Agriculture Act 2020.
• These regulations will ensure written agreements are used between all producers and their buyers. We will work closely with industry to explore what other provisions, if any, should be mandated as part of these agreements.
• We will continue to engage with stakeholders to ensure that legislation works for all parts of the UK and incorporate special provision for differing circumstances, if necessary. Where there is no minister in place, as in Northern Ireland at present, we will continue to work closely with government officials.
• We will also develop regulations to collect and disseminate more supply chain data, particularly in relation to wholesale price transparency and national slaughter numbers. We will use the powers in sections 23 to 28 of the Agriculture Act to create such provisions in England. We will work with the devolved administrations on this issue, as this is a devolved matter.

Annexes

Annex 1: About the analysis

It is important to keep in mind that public consultations are not necessarily representative of the wider population. Since anyone can submit their views, individuals and organisations who are more able and willing to respond are more likely to participate. Because of this likelihood for self-selection, the approach of this analysis has not only been to count how many respondents held a certain view but also to include qualitative analysis of the additional comments provided to understand the range of key issues raised by respondents, differences in views and the reasons for them holding their view. In presenting the results, we have aimed to provide a broad picture of all views and comments. Therefore, a range of qualitative terms are used, including ‘most’ ‘many’ ‘some’, and ‘a few’. ‘Most’ refers to a significant majority, ‘many’ refers to when a substantial number of respondents have a similar view, ‘some’ refers to when there is a reasonable number of respondents with a similar view and ‘a few’ refers to a small number of respondents. Interpretation of the balance of opinion must be taken in the context of the question asked, as not every respondent answered all the questions, and not every respondent who provided an answer to a closed question provided additional detail. In this respect, qualitative terms are only indicative of relative opinions to questions based on who responded. Therefore, they cannot be assumed to relate numerically back to the total number of people and organisations.

Annex 2: Types of responses

Online survey

Respondents were encouraged to submit an online response by completing an online survey hosted on Defra’s consultation website, Citizen Space. The online survey followed the questions asked in the consultation paper: featuring both closed (for example, tick box questions), and open questions (asking for respondents to detail their views or provide further evidence or examples). Respondents were able to answer as many or as few questions as they wanted. For the closed questions statistics are provided on the responses to each proposal. For open questions, a summary of the main themes emerging from the responses is provided within this response.

Email and post

Responses could be submitted directly by email or post. Some of these responses answered the consultation questions directly. Others provided a more general commentary on the use of contracts within the pig sector. Where responses answered the specific consultation questions, these have been included in the data analysis of each question. Where responses provided additional general views on the use of contracts, we have reflected these in the general analysis of relevant question areas.

Organisational responses

Organisations and stakeholder groups were able to submit responses to the consultation on behalf of their members. As with the responses obtained via email and post, some of these responses followed the consultation format, while others provided general views on the role of possible legislation in the sector. The key arguments raised in these organisational responses are included alongside individual responses in each of the relevant sections. A list of organisations who submitted a response is included in Annex 3.

Annex 3: List of responding organisations

Of all responses, 44% asked to be confidential. This list of responding organisations is not exhaustive. Rather, it is based on those that declared their organisation. This may include responses from individuals who are members of specific organisations and therefore does not necessarily reflect that organisation’s views. Similarly, we cannot guarantee that the views of organisations are reflective of all members. This list also does not include organisations that asked that their responses be kept confidential.

• A One Feed Supplements Ltd
• The Agriculture and Horticulture Development Board (AHDB)
• Baynes Nutrition Limited
• Bishopton Veterinary Group
• British Meat Processors Association
• Cargill animal nutrition
• Duynie Limited
• Elite Sires Ltd
• Eville and jones
• Farm Animal Welfare Consulting Ltd
• Farmex Ltd
• For Farmers UK Ltd
• Fodder
• Fram Farmers Limited
• Hawkes ltd
• Holmefield farm services
• The Livestock Auctioneers Association Limited
• Meadow Quality
• MeatWise International - Meat Management Magazine
• Mochyn Mawr
• National Farmers Union Scotland
• National Pig Association
• Pedersen Nutrition
• Perrys of Eccleshall
• Premier nutrition
• Provision Trade Federation
• PCM
• PIC
• Quality Meat Scotland
• Quantech Solutions (UK) Ltd
• Severn Edge Farm Vets
• The Scottish Association of Meat Wholesalers
• Stephen Hall Management
• Thames Valley Cambac Ltd
• Trouw Nutrition GB
• Ulster Farmers’ Union
• Violet Wylie Consultancy