Threats to the British pig industry from rocketing feed costs and almost static prices are likely to continue, says an independent report commissioned by the British Pig Executive.

The report predicts production costs could be as high as 180p per kg by 2010, compared with around 140p at present and an average of 108p in 2006.

Global feed commodities market, its impact on the British pig industry, and risk management strategies to mitigate this, was commissioned by BPEX with independent contributions from ABN and Barclays.

Pig production

Feed accounts for almost half the price of producing a pig, and the rising price of feed commodities has caused pig production costs to soar.

Independent analysis by ABN on current and future commodity price trends shows:

The cost of producing a kilogram of pig meat is forecast to rise from 108.2p in 2006 (on an annualised basis) in to 148.1p March 2008.

Pig pricing

Assuming an average producer price of 115p in 2008, this implies a loss of 30p/kg, which is equivalent to £22 on every pig produced – equivalent to an industry-wide annual loss of £200m.

Barclays’ independent analysis highlights how supply chain collaboration such as fixed price contracts, or sales contracts linked to commodity prices, may help ease the risk faced by pig producers.

BPEX chairman Stewart Houston said: “The report illustrates how the British pig industry remains under threat – without a price of 140p per kg pig producers will continue to suffer unsustainable losses.

“This will see British pig producers leaving the industry for good.

Pig

“The British pig industry is unique, producing pork, bacon and ham to standards of animal welfare which are not regularly matched outside Britain.

“The loss of the British pig herd will mean consumers lose the choice to buy pork, bacon and ham from a high welfare, assured supply chain, that deploys sustainable production methods”

  • A full analysis of the report will be published in the 25 April issue of Farmers Weekly.