Pig producers strive to cope
By Peter Crichton
ONLY the most efficient pig producers started the New Year with their units running at a profit.
The Average All Pig Price has dropped 22p since last January and currently stands at only 89p/kg. A 75kg deadweight bacon pig is now worth £16 less than it was one year ago.
Cull sow values are also very low. An average sow this week is worth only about £85/head.
Cheap imports continue to hit the home market – especially at the manufacturing end.
EU reference prices show deadweight pigs were selling in mid-December for as little as 77p/kg (Holland); 89p/kg (France); 92p/kg (Spain); 92p/kg (Eire); 96p/kg (Denmark); 101p/kg (Germany); and 110p/kg (Italy).
Back in the UK, the strength of Sterling makes it difficult for producers to export competitively, except at a discount.
Current domestic deadweight quotes show most baconers are traded at 75-80p/kg. Lighter pigs are worth an additional 10-15p/kg, making it a better bet to sell on the spot market.
As a result, year-end balance sheets on many units will see sharp falls in asset values. This is bad news for heavily-borrowed producers expecting a visit from the bank manager. For many, the opportunity to extend overdraft facilities looks remote.
Coupled with this, tax demands are starting to drop through farm letterboxes and threaten to add more pain to the misery.
Some breeders are now attempting to cut costs by selecting their own replacement pigs rather than buying gilts for up to £160/head. This is a strategy well worth investigating, provided it is supported by good overall herd health and a wide genetic base.
If home-bred gilt replacements are selected, a possible reduction in herd performance can be avoided by upgrading boars and using artificial insemination to “spread” quality.
The falling cost of feed is perhaps the only good news at the moment. Artificially high soya prices are expected to ease over the coming weeks.
For those prepared to drive a hard bargain, finishing-ration prices are quoted by compounders at £125-130/tonne.
But some millers can put together an equivalent 18-19% protein ration for little more than £100/tonne. Such a saving is worth around £4/pig to a finisher and can give savings of £40 per sow to a breeder.
Such is the state of the industry that there is often little any producer can do other than complain about low prices. But any strategy which minimises losses and allows those still in business to benefit from a price revival, when it eventually comes, is to be welcomed.