Falling wheat prices help struggling pig producers

Many pig farmers moved back into the black for the first time since June 2007 last month, according to figures from AHDB meat services.

They showed that the average cost of production per pig (including fixed and variable costs) fell to around 134p/kg deadweight in October, some 10-15p/kg off the April to July peak. DAPP pig meat prices had been hovering around 136p/kg/dw for the past two to three months, so the fall in costs – principally due to lower feed wheat prices – meant many producers made a small profit of £1 a pig, AHDB senior economic analyst, Tony Fowler said.

“It’s a lot better than the period between October 2007 to April/May this year when many producers were losing over £20 a pig on average. But our figures do assume people are buying feed on spot prices, which isn’t always the case – many will buy a month or even a year in advance and are still feeling the effects of the higher prices.”

Provided pigmeat prices remained steady and feed costs continued to fall, there was a reasonably optimistic outlook, Mr Fowler said. “At the moment, [pig] prices have been held down a bit by high supplies from many European countries, such as Spain, France, Belgium and Ireland. But our forecasts suggest lower production there in the last quarter of 2008 and first half of next year, so there is potential for [price] increases.”

Domestic exports had also been boosted by the weak value of sterling relative to the euro, he added. “Exports were 13% up during the first eight months of this year and imports 15% down year-on-year.”

But on the flip side, pork demand had been weakened slightly by the economic downturn, he noted.