Cautious optimism among pig farmers after tough nine months

Low pig prices, coupled with high costs, saw producers lose an average of £11 a head on every pig sold during the first three months of 2019, according to the latest figures from the AHDB.

This was the biggest quarterly average loss since 2012 and the third consecutive quarter of negative margins, after losses of £4 a pig in the third quarter of 2018 and £7 a pig in the fourth quarter.

It is based on an average GB finished pig cost of production of 156p/kg, which is 12p/kg higher than the same period last year.

See also: Pig prices well below cost of production levels

This cost-of-production figure does include non-cash costs such as building depreciation and family labour, which average about 15-20p/kg.

While these costs have no effect on the immediate cashflow of a business, the AHDB points out that they are important for the long-term viability of a business.

“Individual producers will have variations in their costs, and many producers will have remained in the black on a cash basis,” it said.

‘More positivity’

AHDB analyst Alex Cook said although prices have gained about 9p/kg since the end of March, assuming total production costs have remained similar, producers would still be losing about £4 a head (-4p/kg).

“Fortunately, the outlook for the rest of the year offers more positivity. Rising import demand from China has already resulted in an increase in UK pigmeat exports and looks set to continue amidst the ongoing ASF crisis,” Mr Cook said.

“Chinese demand has also supported EU prices, and on top of this, EU supplies could remain tightened in the near future as current EU pig herd numbers are down on last year.

“With strong global demand and lower competition from EU imports, UK prices look set to continue their rise in the coming weeks,” he said.

Pig market analyst and industry commentator Peter Crichton said the sentiment among pig producers was now one of cautious optimism.

The standard pig price (SPP) had continued its slow upward track, rising by another 0.81p and now stands at 149.76p.

“Hopefully by this time next week we will have reached the 150p/kg barrier,” Mr Crichton said.