UK pig producers continued to make a healthy profit during the first quarter of 2024, but lower prices eroded margins slightly, the latest AHDB net margin figures show.
Pig producers, on average, recorded a margin of £16/head during Q1, down from £19/head in Q4 2023 and £22/head and £25/head respectively in Q2 and Q3. It means there have now been four successive quarters of positive margins, averaging in excess of £20/head, following 10 successive quarters of losses, which exceeded £50/head during the first half of 2022, with total industry losses estimated to have exceeded £750 million over that period.
The Q1 estimates, which use performance figures for breeding and finishing herds, indicate that the full economic cost of production for Q1 2024 was 194p/kg deadweight, down very slightly from 195p/kg over the previous two quarters.
Feed costs have remained consistent with Q4 2023, at 121p/kg, making up an estimated 62% of total costs. Feed costs are, however, down considerably from the peak of 175p/kg in Q2 2022, when feed accounted for 73% of total costs, and 139p/kg in Q1 2023. Energy and fuel costs rose slightly over Q4, which contributed to a slight increase in other variable costs.
Pig prices fell during Q1, compared to the second half of 2023, with the APP down 5p on Q4 to average 212p/kg over the three-month period. This resulted in a net margin of 18p/kg, compared with 21p in Q4 2023, and a still healthy net margin per head of £16.
Prices have remained remarkably stable moving into Q2. However, looking at a monthly breakdown of costs it is evident that feed costs started to come down towards the end of Q1, AHDB senior economist Jess Corsair said.
But she added: “It is worth considering that grain prices have been rising in Q2 which could impact feed prices and cost of production going forward.”