Update from the Pork Sector Chair (October 2024)

Over my time in post as Pork Sector Chair, market forces have been uncharacteristically stable. Has the ‘pig cycle’ been confined to the history books? This question reminds me of the former Prime Minister Gordon Brown thundering from the despatch box that he had secured “no more boom and bust”, before presiding over the biggest economic collapse for almost 100 years. It was a maxim in my previous life that extrapolation is not the same as forecasting.

In my last letter in June, I used the analogy of a Scottish football supporter approaching the summer championships to sum up my perception of the mood of the industry faced with these dynamics. The day-to-day economics of the pork market were good, but no-one was being foolish enough to get suckered into anything as reckless as hope.

Pork market

In the last three months, I perceive that confidence is gradually improving as prices remain relatively high and stable, and there is a decent balance of supply and demand. There are notable pools of investment. However, it remains true that widespread investment into growth projects is absent.

It is possible that the growing gap between prices achieved for pigs in the UK and in Europe is acting as a natural brake on enthusiasm, recognising that the difference will eventually impact domestic prices. This is particularly the case when one considers the strength of sterling relative to the euro and US dollar this year. On the flip side, on global markets, soya and cereals are generally at levels that prevailed pre-pandemic, when adjusted for currency movements.

Marketing and education

It is against this backdrop that AHDB’s work in marketing and education is fundamental in helping to sustain the price premium achieved for British pigs and pork. The Pork Sector Council allocates the largest part of its annual budget to marketing, investing roughly a third of its resources in this area. Since my last letter, AHDB has commissioned a detailed, independent analysis of the impact its Feed Your Family for Less with British Pork campaign had in the early part of the year. The work has two important aspects for the sector council.

The first is to quantify the value generated by the levy-payer funds we invest on your behalf. The analysis shows a very attractive return, delivering approximately £10 of additional retail sales for every £1 spent on the campaign. A typical consumer product campaign delivers a three-times return on investment. This outperformance is testament to the category-specific experience in AHDB’s marketing team, and highlights the extra return that can be generated when media-orientated advertising is augmented with coordinated in-store marketing. Working in partnership with processors and retailers to achieve outcomes that benefit the whole supply chain is one of the key tools AHDB has to drive sales and improve consumer attitudes.

The second aspect of the analytical work commissioned on the marketing campaign is to deliver insights that will further improve the efficiency of future marketing investment. We have clear data that shows the optimal size of a campaign to deliver the highest return. Below a certain level, the activity fails to achieve critical mass. Incremental investment above that level is largely wasted. Efficient and effective marketing comes in discrete large campaigns. The budgeting process for next year will take place over the next few months. We will target exactly the size of investment that delivers the highest value to levy payers.

Engagement

At a wider level in AHDB, the summer months have seen a broad reorganisation of its operating structure. It will bring focus, empowerment and a renewed emphasis on internal efficiency. Angela Christison, whom many of you know well already, will lead the executive team in the pork sector, devoting her energies to delivering on the industry’s priorities. An important element of this will be effective and productive engagement across the industry spectrum.

Effective and dynamic engagement between AHDB and its levy payers is not simply an exercise in stakeholder management. It is a fundamental plank in ensuring that AHDB delivers the maximum return for the levy investment. The organisation is focused on creating tools and producing evidence that will allow the pork sector to take market share from other proteins and non-proteins. It supports efforts to defend the dominant position British pork has in domestic retail facings and promote its virtues overseas. It helps inform decisions that allow retailers to get the best out of its merchandising. And it does it well.

But maximising its benefit requires AHDB to be fully embedded in the sector’s growth plans. To be anything else risks it turning into ivory tower proselytizing.

As Sector Council Chair, I am determined to ensure this does not happen. To this end, the team at AHDB will redouble their efforts to dynamically engage with levy payers. Increasing engagement at a strategic level and ensuring that its work is aligned with the industry’s own ambitions for growth right across the supply chain will allow the team to deliver even greater value on the levy investment. The doors of AHDB and the sector council are open. Please get in touch.