Pig margins remain perilously thin

Profit margins for pig producers throughout the EU remain slim, though the EU mainland average price has held steady since early October.

The EU “big six” pig production country quoted an average €1.32 (90p/kg) in the week beginning October 31.

This price is 4.3% down over the last 12 months but UK quotes have shown a slightly different trend.

The latest GB Euro Deadweight Adjusted Pig Price is quoted at 101.86p, which is 1.2% up over the same period.

A year ago the British Pig Executive published their “Barriers to Investment” survey which suggested that 30% of UK producers were losing money or barely breaking even.

Since then fuel, wages and feed costs have risen and profit margins continue to come under pressure.

Although breeding gilt companies are reporting healthy order books, in many cases these are to restock worn out herds rather than genuine expansion within the industry.

Industry sources quote average cost of production figures for farrow to finish units of close to 100p/kg/deadweight.

After grading and slaughter deductions and haulage costs, net deadweight returns can shrink by up to 5% from the bid price.

This means that the average finisher may be paying in little more than 96p/kg to the bank.

News that the Farmers Weekly 300 sow farrow to finish Easton Lodge pig unit is to close immediately also underlines the marginal profitability of some medium sized indoor units.