Producers still losing £18-£20 a pig as inflation hits

Cumulative losses across all pig producers since October 2020 is estimated at more than £700m, based on the latest AHDB figures.

In September, the average pig producer was estimated to be losing between £18 and £20 a pig.

This was based on an average cost of production of 224p/kg deadweight for September, while deadweight pig prices hovered around 200p/kg.

See also: NPA calls for legal contracts to avert pig sector collapse

However, the top one-third of producers had an estimated cost of production of 194p/kg deadweight during the month, which would have allowed some producers to break even.

High interest rates as well as feed, energy and fuel price inflation are all having an impact on pork cost of production.

Feed has accounted for about 70% of total costs of production during 2022 to date, while traditionally feed would account for 60-65% of the total cost.

Carol Davis, lead farm economics analyst at the AHDB, 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 with 2021.”

Marginal price rises

The EU-spec standard pig price (SPP) averaged 200.55p/kg for the week ending 8 October, up a marginal 0.19p/kg on the previous week and about 50p/kg on the same week last year.

Scottish pig producer group Scotlean said this rise was not enough, by a long way.

Scotlean chief executive Ian Paragreen said all processors had stood on across the board on bacon sales and fresh meat pig trade in the past week.

“Spot demand was only steady this week and consumers are certainly holding back buying meat, when you would think demand would be improving with a nine-week run-up to the Christmas period, and some processors again didn’t want contractual numbers,” he said.

Pig consultant Peter Crichton said the shortage of pig numbers could start to make itself felt, but the root of the problem was very poor retail demand, with consumers looking to save money at the meat counter.

“The average EU reference price stands at around 187p/kg,” he said. “This compares with UK reference prices of 200p/kg and it remains difficult for domestic pig producers to continue to face soaring losses at a time when cost of production levels keep rising.

“The flood of imports continues to undercut the domestic market, so it looks as though there is more pain before we see any significant long-term gains in the profitability of the beleaguered UK pig industry.”