Fine margins for pig producers as finished prices waver

Finished pig prices have been steadily falling throughout 2024 and have fallen by more than 7p/kg since the beginning of the year.

The EU-spec standard pig price (SPP) has been hovering at 206p/kg throughout November and early December, down by 5% on last year.

GB retail sales of pork declined in volume by 3% during the autumn months year on year, while average prices were marginally up.

See also: Profits up by 17% at meat business Cranswick

However, export markets fared much better with HMRC figures showing export volumes were up by almost 5% during the third quarter of 2024.

Increased market access for UK pork exports to China will also benefit the sector with the estimates suggesting it could provide an additional £80m in revenue.

Government trade minister Douglas Alexander said: “China is already a huge market for UK pork businesses who exported £180 million of products to China last year alone.”

He added it would come as welcome news for farmers and producers who have been affected by the suspension and could grow British pork exports even further.

Cost on farm

Margins remain tight on farm with cost of production estimated at 190p/kg deadweight during the third quarter of 2023, leaving a margin of roughly 16p/kg based on current prices.

Lower feed and energy costs will be welcomed by the pig sector; however, these savings have been partially offset by higher labour and veterinary costs.

National Pig Association senior policy adviser, Tom Haynes, said: “This is a sector that operates on tight margins.

“For some businesses, the combination of the national insurance hikes and national living wage rise could further squeeze profits to the extent that they have to cut back on labour and, therefore, potentially productivity.”

Europe

Pork production in Europe is forecast to decline by 0.5% in 2024 and a further 0.2% in 2025, according to the EU Commission.

Fewer pigs have led to lower profits at major European pig producer Danish Crown for the 2023-24 financial year, with profits back by almost 30% to 1.04bn kroner (£115m).

It also resulted in the business announcing more than 500 redundancies in October.

Danish Crown chair, Asger Krogsgaard said: “The number of slaughter animals in Northern Europe has decreased substantially.

“Contributing factors include a sharp decline in demand for pork in China, the arrival of African swine fever (ASF) in Germany, and the surge in raw material prices following the outbreak of war in Ukraine.”