Accurate Price Reporting Essential for Competitive Marketplace, Says Pig Association13 January 2014
UK - Robust price reporting is essential for maintaining a genuinely competitive British pig marketplace. "Any pretence that pig industry price reporting could be anti-competitive is risible," declared NPA Producer Group.
If processors refused to report prices into the DAPP, they would be jeopardising the current recovery of the British pig industry for their own short-term gain, said NPA producer members.
Informed yesterday that a major processor — publicly-quoted Cranswick — was poised to pull out of DAPP reporting, and that this might conceivably cause a domino effect among other processors, NPA Producer Group pledged to work with BPEX to guarantee an accurate weekly DAPP is always available to producers, not only now, but in the years ahead.
Whether individual processors want to use the DAPP as an element of their contract pricing agreements is up to them and the producers that supply them. The crucial issue is to ensure that accurate price reporting via the DAPP continues uninterrupted, said Producer Group members.
They urged all processors to keep faith with the British pig industry by continuing to report prices into the DAPP.
But if some of the big players decided to stop reporting, NPA would work with BPEX, key producers and the industry's marketing groups, to produce a weekly DAPP that is as accurate and reliable as the current DAPP, the meeting agreed unanimously.
Price data is essential
BPEX director Mick Sloyan told NPA Producer Group that it was essential that the industry continue to collect historic price data for the industry's weekly DAPP figure.
"Good quality information is viewed as making markets operate more competitively," he said. "That is why almost every agricultural product has a price series. In some cases price reporting is a legal requirement, because that is the way that efficient markets work."
BPEX was required by government to collect weekly price information for the European Commission, and up till now it had been possible to achieve this without any form of coercion by government, he said.
Considering the future of the DAPP, Producer Group members were clear that price information could be supplied by buyers or sellers, and it didn't matter which, as long as the information was accurate.
On this basis, the option to bypass processors and produce the DAPP from weekly data supplied by marketing groups and large-scale producers looked attractive to members of NPA Producer Group at their meeting yesterday.
"The important thing is that we don't lose the DAPP," said Producer Group deputy chairman Phil Stephenson (who chaired the meeting in the absence of Howard Revell).
NPA chairman Richard Longthorp reported that all the major marketing groups had agreed to participate if the industry decided to take its price reporting data from sellers (producers) rather than buyers (processors).
Robust and timely
Mick Sloyan said BPEX was committed to producing a weekly DAPP figure, as long as it could get robust data in a timely fashion.
He stressed the important role of the DAPP in ensuring that the pig market remained genuinely competitive. "At present prices paid for pigs tend to be very similar and that is evidence of a highly competitive market, which is working to the benefit of consumers."
He agreed with Producer Group members that it would be "entirely feasible" to use marketing groups and larger producers to collect data for the DAPP, although it might take a little longer, two weeks instead of one.
Producer Jimmy Butler felt the extra time lag would not be important as a price that moved a little more slowly upwards would also be a bit slower to move down, which would be fair to both buyers and sellers.
"Would the new figure still be called the DAPP?" asked Sally Stockings. "It is important, because that is what is used in all the contracts."
Mick Sloyan said he would be happy for the weekly price data to continue to be called the DAPP (Deadweight Average Pig Price) because it would be generated from "an equally valid source of data".
Noting that marketing groups accounted for 50 per cent of English pigs marketed every week, NPA Producer Group agreed that the data they supplied would be highly accurate, especially when combined with data from the country's larger producers.
It might even be superior to the information currently supplied by the large abattoirs, as the marketing groups sold pigs to a wider and more diverse customer base.
A newly-sourced DAPP — if it became necessary to introduce one — could be more accurate than the current DAPP as price data would be received from the sale of 70,000 to 75,000 pigs a week, to a wider abattoir base than is currently the case.
Mick Sloyan stressed that producing a trustworthy historic price was essential for a genuinely competitive marketplace.
How processors and producers used historic price information was up to them, he said, but as long as it was strictly confined to their discrete vertical supply chains there could be no question of the DAPP being perceived as anti-competitive.
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