Outlook 2025: Pig margins stay positive in changing sector

At the time of writing, it isn’t the pig industry that’s squealing the loudest any more, having experienced positive margins for six consecutive quarters for the first time in more than four years.

That said, the volatility of the past three years has created significant changes to the structure of the UK pig sector, says associate partner Harry Batt.

See also: 10 ways to attract and retain staff in pig sector

The AHDB’s quarterly cost of production indicates a net margin of more than £15/head for the past 18 months.

This is the first time that this has been recorded on the board’s model, which dates back to 2009.

However, in reality most producers are still recovering from the losses incurred during the pig crisis of 2021-22.

AHDB figures show that production costs rose by 54% between the start of 2019 and the second quarter of 2022, when losses were at their greatest.

Much of the increase in costs can be attributed to electricity, fuel, feed and more recently, bedding (straw).

Bedding options

Producers will have to consider bedding options if straw prices remain at current levels of up to £140/t delivered.

They should take the opportunity to review straw-for-muck arrangements, especially given the growing pressure on arable farmers to improve their soil organic matter and to try to reduce reliance on manufactured fertilisers.

The June 2024 Defra census showed the English breeding herd had fallen to its lowest recorded level, down 1% to 325,900 head including boars.

This marks a drop of 150,000 sows, or 37.5%, in three years.

With the English herd accounting for approximately three quarters of the total UK breeding population, have we now fallen below the critical mass of sows (and producers)?

Despite a number of producers leaving the industry, especially during the recent pig crisis, investment appears to be continuing on farms that aim to remain within the sector.

Current spending is geared around improving efficiency and ensuring compliant facilities, rather than expanding production capacity.

This is likely to create an upward movement on “average” production efficiencies; that is fewer, but better producers.

Production up despite fall in herd

UK pigmeat production is expected to have risen by 2.7% in 2024, with more slaughterings due to productivity gains, including reduced piglet mortality and increased carcass weights.

The industry’s ability to improve the efficiency of pigmeat production can only be seen as a positive.

Increased efficiencies should also enable the industry to be more competitive in a world that could see more product displacement, given changing geopolitical pressures.

Those efficiencies are also reducing greenhouse gas emissions per kilogram of pigmeat. The sector must also do more to publicise the much-improved carbon footprint of production.

Since 2021, clean pig slaughterings have fallen by only about 5%, despite a 38% reduction in the breeding herd.

The sector is also becoming more vertically integrated. Producer/processor companies such as Cranswick, Pilgrims and the Karro Food Group are responsible for an ever-increasing proportion of pigmeat supply.

Some may bemoan the loss of the “independent” pig farmer but, as has been seen in the poultry sector, integrated supply chains can be powerful in disseminating best-practice and driving efficiencies.

The changing structure also opens up opportunities for non-specialist pig farmers to be involved in the sector with reduced risk through “bed-and-breakfast” arrangements.

The industry is very innovative and looking for ways to become more sustainable, evidenced by the Green Pig Research Project.

The ability to replace soya with either peas and/or beans in a finisher pig’s diet, without a detrimental effect to body weight gain, carcass weights or back fat measurements, could be important for the industry.

It would allow reduced reliance on soya, the use of which could be challenged further, both from regulation and consumer demands, providing possible opportunities for UK pulse production.