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Estimated Great Britain pig production costs in the second quarter of this year reached a record 182p/kg, according to the latest AHDB estimates. This was an increase of 8p/kg from the previous high of 174p/kg recorded in the first quarter of this year. Compared to the same time last year, production costs were 27p/kg higher.
The increase primarily reflects rising feed costs, however, both labour and fixed costs had also increased compared to the first quarter of 2021.
Pig prices have also increased compared to the start of the year. The APP [(All Pig Price) GB average deadweight pig price achieved by producers each week] averaged 154p/kg in Q2, 9p/kg more than during the first quarter. However, compared to last year, prices are 13p/kg lower. This means that, on average, pig producers remain in a significant loss-making situation. Estimated net margins stand at -28p/kg (or -£24/head) in Q2 2021, a similar situation to the first quarter.
The first half of 2021 therefore represents the worst financial situation for pig producers, across a six-month period, on record. It is typical for pig production to go through cycles of profitability and loss-making. However, it is unusual for margins to be this low for a prolonged period.
It is not clear that the situation will be better overall in the third quarter. The EU-spec APP averages 165p/kg from the start of July to mid-August, which is higher than the Q2 average, but prices are now on a downward trend. Low EU prices and a more challenging Asian export market may mean this trend stays in place for the coming weeks. At the same time, it seems feed markets have remained strong. As such, the outlook for British pork producers remains difficult.
September 2, 2021/ AHDB/ United Kingdom.
https://ahdb.org.uk/
