Pig price continues to rise, as throughput remains high

The SPP is continuing on its upward path, gaining another 1.35p last week to average 143.86p/kg.

The price index is still 20p below the same week last year, but 0.39p above the five-year average.

Estimated throughput at GB abattoirs totalled 181,400 head, down 1% on the week, but up 4% year-on-year, again highlighting how processors are making up for the shortfall in production for much of the early part of 2020, which resulted in a major backlog of pigs.

In fact, AHDB figures also show UK pig meat production was ‘exceptionally strong’ in March, as output reaching 97,900 tonnes, 15% higher than in March 2020. Even accounting for this March's extra weekday, the increase is still about 10%, AHDB's Bethan Wilkins said.

Clean pig slaughter was up by 12% at 1.06 million head in March, equating to a 7% increase when taking account of the extra weekday, which indicates that the industry has been working through the backlog that developed towards the end of last year, Ms Wilkins added.

At the same time, carcase weights continued to lighten week-on-week, averaging 87.29kg in the weeked ending April 17, down 620g on the week before. Carcase weights now average 2.1kg heavier than this time a year ago, having generally been at least 3kg heavier for much of the year. 

Strong demand, tighter supply and healthier EU prices have been cited as the main reasons for the steady increase in the SPP, which has now gained more than 5p since late-February.  

Context 

However, the brighter outlook currently needs to be put in the context of the market situation producers have faced over the past six months or so.

Input prices, particularly feed, remain high - with AHDB estimating that, alongside low prices, producers were losing on average £25/pig during the first quarter of 2021, following an average margin of -£6/head in the last quarter of 2020. 

Defra's recently-published Farm Business Income figures forecast that average pig farm incomes have fallen from £37,000 in 2019/20 to just £5,000 in 2020/21, a massive 87% reduction, despite a relatively first half of the financial year. 

The NPA has submitted a request to Defra for a £3.2 million COVID support package to recognise the impact of penalties for overweight pigs on producers’ incomes. The British Meat Processors Association (BMPA) has submitted a separate request for support to reflect the financial impact on processors of the loss of China exports.