Lower feed costs help pork producers return to profit

Rising finished pig prices and falling costs of production have allowed producers to move back into a profit-making position after a long period of losses.

Pig producers had an average positive net margin of £22 a pig during the second quarter of 2023, according to AHDB estimates. This is compared to a £52 a pig loss during the same period in 2022.

It is the first time pig producers have made positive net margin since autumn 2020 and follows on from 10 consecutive quarterly losses.

See also: Finished pigs back in profit and prices at new record highs

The full economic cost of production for the second quarter of 2023 was estimated by AHDB at 196p/kg deadweight, down by 17p/kg on the previous quarter.

Analysts say much of this fall in cost of production is due to lower feed costs, however some on-farm costs have risen due to higher interest rates.

Feed represented 123p/kg of the total cost of production during the quarter, labour accounted for 16p/kg, building and finance for 46p/kg, and other variable costs for 11p/kg.

The standard pig price was up by 13p/kg during the second quarter of the year to average 221p/kg deadweight.

Finished pig prices have since risen further and the EU-spec standard pig price averaged 225p/kg for the week ending 22 July.

Carcass weights averaged 88kg, which is back slightly on the previous quarter, but still remains high compared to normal levels.

Industry reports suggest that demand from buyers has eased slightly during the summer months, but with pig numbers remaining tight, prices are likely to stay well supported.