Net margins continue to be negative for pig producers

With continuing increases in feed costs and depressed pig prices, the last quarter of 2021 resulted in estimated net margin losses of £39 per pig.

The last time pig producers were estimated to be making a positive net margin (£7 per pig) was in 2020 Q3 when feed costs were 100p/kg and EU-spec APP pig prices averaged 166p/kg. By 2021 Q4 feed costs had risen to 134p/kg – an increase of 34% in 15 months – whilst APP pig prices had dropped to 151p/kg. The 17p/kg difference is not enough to cover the 59p/kg of other variable, labour, and overhead costs.

Feed costs have always been a significant proportion of production costs, usually around 60%, but feed costs now account for 70% of costs. This is the fifth quarter of estimated negative net margins and with no relief yet in sight for feed prices and pig prices, margins are likely to continue at historic lows in the first half of 2022.

Pig prices would have to rise to at least 200p/kg to deliver any reward to pig producers. Any improvements in technical performance, or increases in carcase weights, will not be sufficient to counterbalance the levels of losses currently being observed.

These figures are based on industry averages and are estimates only. If you haven’t already, have a look at these tools to calculate your own cost of production.

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