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Lower prices squeeze Q4 margins slightly, but industry remains in profit

2nd Feb 2024 / By Alistair Driver

Pig producer margins fell back slightly during the final quarter of 2024 to £19/pig, as prices declined, but the industry, on average, remains comfortably in the black. 

The latest AHDB quarterly cost of production and margin estimates indicate that the full economic cost of production for Q4 2023 was 195p/kg deadweight, which was unchanged from Q3.

Feed costs remained at 121p/kg, making up an estimated 62% of total costs Q4, compared with 69% in Q4 2022, when feed averaged 154p/kg and 73% in Q2 2022, when feed costs hit an eye-watering peak of 175p/kg.

Energy cost fell back further over Q4, compared with the peaks of 2022 and the beginning of 2023, but fuel costs rose slightly, meaning the overall production cost was unmoved.

Pig prices fell by around 8p during Q4, with the APP averaging 216p/kg to give a new margin of 21p/kg or around £19/pig. This was slightly down on the Q2 and Q3 average margins of £22/pig and £25/pig respectively.

Net margins Q4 23

However, continued elevated prices have now ensured three consecutive months of positive net margins, as recorded by AHDB, after 10 successive quarters of negative margins and accumulated industry losses of around £750m.

Pig prices have continue to decline gradually into the first quarter of 2024, although cereal prices have also been heading in the right direction.

These estimates use performance figures for breeding and finishing herds. However, due to changes in provider, the figures for Q4 2023 feeding and breeding herds use twelve-month performance data from March 31, 2023.