Pig profits fall short of previous high
Pig profits fall short of previous high
Profits at farmers weeklys Easton Lodge pig unit were
firmly in the black, recording a bottom line just under
£50,000. But its recent closed herd policy has taken the
edge off pig performance as James Garner finds out
COULD it have done better? That is the big question for the Easton Lodge pig unit. Foll-owing a handsome profit in 2000, this years bottom line was still in the black, but pegged at £47,612 for the year ending Nov 30, 2001.
Profit, excluding unit manager Jasper Renolds salary, was down £27,222 on the year as performance slipped from last years exceptional levels.
However, it would be unfair to criticise Mr Renold and his staff. The unit had to react quickly to the threat of disease in October 2000 and cope with additional biosecurity measures brought about by the foot-and-mouth outbreak.
"Had the unit maintained the same high level of pig output as in 2000, it would have doubled its margin to £100,000 through a rise in the average selling price of 5.4p," says accountant James Craddock, of Deloitte & Touche Agriculture.
"In fantasy farming, the unit could have made that," he adds. "Unfortunate-ly, farming is not that easy. It must be noted that 2000 was a particularly excellent year in terms of physical performance at Easton Lodge and it would have perhaps been too optimistic to expect it to have continued, especially in light of the disease status in the UK."
Even though 2000 was a hard year to live up to, such a sharp downturn in physical performance was a surprise. The decision to close the herd was taken 18 months ago to protect it from the ongoing threat of blue ear and pig wasting diseases.
This change in breeding policy has hit the unit hard. John Lambkin, farms manager at Easton Lodge, says: "Mortality has increased because we are breeding from bacon house gilts not genetically improved for breeding and older sows. This has led to a fall in litter size. Plus we have been less effective in the farrowing house, because of labour recruitment problems.
"We are stuck between a rock and a hard place. The cost of closing the herd is clearly high, but we have succeeded in keeping out the wasting diseases.
"The decision to close the herd was taken on sound veterinary advice, which was endorsed by the management team at Easton Lodge."
According to the units initial forecasts, the pig wating diseases would reduce income by £66,000/year. "The sad thing is that after doing all this, we could still introduce them," adds Mr Lambkin, although very tight biosecurity measures are being enforced.
The main difference between last year and 2000 was the number of pigs sold. Feed prices also rose by 10%, due largely to higher soya prices. This added an extra 4.5p to the costs of producing a kg of pigmeat, but a margin over feed was still maintained. Lower feed usage (see graph above) counteracted the price rise, resulting in feed cost of £293,265 for the year.
In total, there were 548 fewer pig sales than in 2000 and the amount of pigmeat produced fell to the 1998 and 1999 levels (see table opposite). Average carcass weights lifted by 0.5kg, but daily liveweight gain fell slightly by 0.08kg/day. Each sows output of pig meat fell by 126kg, compared with the year before.
Litter size was 11.33 pigs/litter last year, compared with 12.21 the year before. This is still a good average according to the Meat and Livestock Commissions top third herds, says Mr Renolds, although nearly a pig down on last year.
"The main contributor has been how many piglets were born – this effectively dropped by 2.4 pigs reared/sow/year," says Mr Lambkin.
The hope is that mortality will fall and pig numbers will pick up next year together with carcass weights and grading.
Whatever the final result, it is clearly too early to judge, although Mr Craddock warns that the situation needs monitoring.
Mr Lambkin says this will happen with quarterly checks. "If at the end of three years we are achieving a decent profit and we havent contracted diseases and are not exposed to the same risks, then we will have met our goals."
The good news is that Mr Renold reckons recent results indicate that performance is picking up. "I think we are starting to get on top of mortality, by clearing out the older sows and we have a new farrowing specialist and a new farrowing house. There is still a lot of refurbishment to carry out, but this has now been started."
The staff recruitment problem in the farrowing house has highlighted one other area of concern. Finding keen and skilled labour was a challenge for the unit in 2001. But Mr Lambkin says this is a common problem.
The debate remains about whether semen costs need to be pruned. "Artificial insemination costs were up. Three inseminations a heat is clearly quite a cost," says Mr Craddock. AI costs rose by £3544 to £9068, though savings were made on the costs of boars.
The plan is to use a more expensive semen and cut the number of inseminations to two per sow heat. The choice of semen is between a PIC boar that has a particular genetic marker that is claimed to reduce P2 carcass measurement by 0.5mm, but costs £4.25/dose, or another PIC boar that is cheaper at £3/dose, but will not make the same carcass improvements.
Further progress in carcass quality would pay for a lot of semen, says Mr Craddock. If carcass weights could be increased to 76kg and grading improved on the P2 measurements, then an additional 2p/kg bonus and increased carcass weight would produce an extra £4.37/pig, or £35,000/year, which would justify the increased semen prices.
Other fixed costs have been kept well in check with labour, power and machinery, property and overheads just £1329 above last years figure of £133,609.
As long as sow output can be improved next year, Mr Craddock thinks that a break-even figure of 90p/kg is a reasonable target for the Easton Lodge unit. In 2001, the break-even crept over 85p/kg to 88p/kg. "The rise needs to be held and kept to 90p/kg. Improvements in performance will pull it back," says Mr Craddock, particularly as this year the unit is working within a new banded contract with Geo Adams that restricts price movements within a range of 90-110p/kg.
"It will take the lows out, even if we dont reach the same highs," adds Mr Lambkin. "The contract also brings greater stability to the business, along with recently negotiated feed supply contracts linked to raw material prices with a known margin to the compounder."
• Copies of Easton Lodge pig unit accounts are available from James Craddock (0113-292 1138). *