British pig producers continue to lose, on average, £18 to £20 per pig produced as costs of production remain at unsustainably elevated levels, according to new figures from AHDB.
Although some producers are now at least breaking even, cumulative industry losses since since autumn 2020 have now topped an estimated £700m.
The full economic cost of production was estimated to be 224p/kg deadweight in September, assuming average technical performance was similar to the 12 months ending 30 June 2022. With wheat prices remaining at unprecedented levels, this is slightly up on the August figure of 223p/kg but below July, 231p/kg, and the Q2 average of 240p/kg.
“We continue to see movements in interest rates, feed, energy, and fuel prices. These will have an impact on pork cost of production,” AHDB analyst Carol Davis said.
“Compound spot feed prices eased slightly during the summer but have increased slightly in September, although they have not returned to the peaks of May and June. Short and long-term interest rates have increased. Fuel prices continue to fluctuate, reflecting the movement in oil prices, but remain at an elevated level compared to 2021.”
With the SPP averaging 200p/kg and the APP 203p/kg, on a full economic basis, pig producers performing at an average level of technical performance will be losing £18 to £20 per pig slaughtered.
However, assuming the same cost base, for those performing in the top third technical level, based on pigs weaned per sow per year for breeding stages and feed conversion ratio for rearing and finishing, the estimated full economic cost of production is 194p/kg deadweight. This higher productivity should result in at least a breakeven situation or possibly a small positive net margin, Ms Davis added.
Nonetheless, the figures suggest that the overall financial situation for the industry continues to worsen. Since October 2020, when producers in the pig industry were estimated to have started making losses, the cumulative loss across all producers is now estimated at over £700m.
This is calculated based on the overall average performance of the industry, the numbers of clean pigs slaughtered and the AHDB cost of production estimations.