Whenever I post about the cost of producing pigs or pork, pointing out the huge gulf between the costs we incur and the price customers expect to pay, I always get responses pointing out the errors of my ways and my failure to understand the economics of the market.
Today was no different. I published our new costs, which have risen because we had to change both abattoir and butcher, then asked how potential and existing customers would react to a price risen given that our existing prices were already a bone of contention.
I quickly attracted the first of the Business Studies 101 responses: be innovative, cut costs, be efficient and subsidise production from other income.
I laughed when I read it.
I’ve had it pointed out to me many, many times before. And it is true.
To get prices down to the level consumers have been led to expect, farmers have to be innovative, be ruthless in cutting costs, be hyper efficient and be prepared to subsidise production from other income.
It’s why agriculture has moved to intensive, industrial farming. It’s why agriculture has moved to low input, high yield breeds. It’s why agriculture has stripped out labour and replaced it with oil (whether machinery, fertilisers, medications etc). It’s why agriculture has moved offshore to countries with ultra cheap labour, more constant climates, and much less in the way of regulations covering labour, the environment, animal welfare, food hygiene etc. It’s why agriculture seeks to become ever more industrialised, ever more lean, ever more efficient and ever more intensive. And it’s why farmers go bust.
What the consumer society can’t and won’t accept is that cheap abundance is in varying degrees of opposition to the other things that are said to be desireable—local produce, high welfare standards, low stocking levels, traditional breeds, genetic diversity, organic standards, small scale, less environmental impact, etc.
No matter how much people proclaim the market has set the price for pork and farmers must produce down to it, the fact is the price is so low as to be barely achievable even with the might of super-efficient industrialised agriculture thrown at it.
I say barely, because British pig farming is in dire straits, as typified by Scotland’s longest established pig farm closing recently. The family who own Dourie farm hope to reopen in the future, but they will only be able to do so if they can persuade the government to subsidise an even more industrialised unit than they had already.
We could do the same. We could build a couple of big sheds with computer controlled feeding, watering, climate control, odour control and more. We could stock them with ultra lean, ultra fast growing, ultra productive modern breeds. We could cut staff to the minimum and use immigrants prepared to accept the minimum wage. We could do the minimum necessary to meet the standards of one of the big name ethical food schemes. We could come up with innovative marketing schemes designed to exploit fast moving niche sectors.
But we’d not be a local food producer rearing rare breed pigs outside anymore, would we?
And would we turn a profit after doing all that? Let alone one that our financial backers, if we could find some, felt to be “enough”?
I think not.
As for our pork sales being subsidised, it’s not going to happen.
There’s no money to be shifted from elsewhere on the croft, we’re certainly not using the OH’s salary to subsidise pork production, and I fail to see why money should come out of our pocket to give customers artificially cheap pork because that’s what the market demands of us.
The Government is never going to support small fry like us. We don’t get Single Farm Payment or any of the other money paid out under various schemes aimed at keeping the consumer sweet with both artificially low food prices and nice touchy-feely messages about preserving the countryside as an eco-friendly leisure facility.
Anyway, the reason our immediate costs have risen is not because we’re gouging customers or trying to upset the market price applecart.
Our costs have risen because, firstly, the costs of feed, straw and energy (both diesel and electricity) have risen steadily for several years. There have been short-term dips but the trend is steadily upwards.
We produce some of our feed, source the cheapest off-farm feeds that we can while still getting the result our customers demand, use less straw than we’d like, and have severely economised on energy costs. But the trend is still upwards.
Secondly, there’s been an immediate spike in the costs because we had to change abattoir and butcher.
We’d prefer to use the abattoir that’s closest to the croft to keep transport costs down. We’d prefer to use the village butcher to the croft to keep transport costs down. We’d prefer to use a village butcher whose charge is one-quarter that of a big processing plant.
If our local, cheaper abattoir and butcher won’t take on our pigs, there’s nothing we can about it but go to the next nearest businesses that will provide the necessary services. And that is going to cost more because they charge more—we haven’t added anything to our costs except the additional amounts we’re being charged.
As for diversifying into other areas, yes, we have sold other produce and investigated many more.
Customers want free-range chickens reared outside but they want to pay industrial chicken prices for them. Customers want eggs from free-range chickens but they want them at battery hen prices.
Customers want fresh, seasonal local produce with few carbon miles and no chemical inputs but don’t want cabbages, kale, parsnips, carrots, beets, neeps, apples and the like. They want tomatoes, aubergines, bananas, avocados, peppers, courgettes, sugar snap peas, French beans, nectarines and the like. But they want their exotic produce in the middle of a Scottish winter. And they want it cheap. And how many will object if we seek planning permission for several heated polytunnels/greenhouses to grow some of their desired produce?
Customers want hand-made jams with no additives and preservaties, but they want them at supermarket prices.
Customers want artisan beers and ciders, but they want them at mass-market, supermarket prices.
The list goes on and is extensive.
No, it’s not easy doing what we do. I didn’t expect it to be. I didn’t even expect to make a living wage out of doing this. My wages come in the form of pork, chicken, eggs, vegetables, fruit, jams, chutneys, pickles, beer, cider, wood and the like. I also get a large amount of muck from the pigs and poultry to invest back in the croft. And I get to live in a beautiful location, side by side with nature.
All I do expect is to get a fair price for what we produce—enough to cover the costs and put a small margin back into the croft.
However, that’s not a price the market will withstand.
Instead, I should count myself fortunate that I can fill my belly with mother nature’s beauty and my pockets with muck. But I am left wondering how many price-sensitive customers would be prepared to accept a pocket of shit as their wages for a hard day’s work?