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Pig producers record healthy Q1 margins, despite falling pig prices

11th Jun 2024 / By Alistair Driver

The latest AHDB net margin figures show UK pig producers, on average, recorded a profit of £16/head during the first quarter of 2024.

While lower pig prices eroded margins slightly, after a net margin of £19/head in Q4 2023 and £22/head and £25/head respectively in Q2 and Q3, this was the fourth successive quarters of postive margins, averaging £20/head. 

Net margins Q1 24This followed 10 successive quarters of losses, which exceeded £50/head during the first half of 2022, with total industry losses estimated to have exceeded £750 million over that period.

The Q1 estimates, which use performance figures for breeding and finishing herds, indicate that the full economic cost of production for Q1 2024 was 194p/kg deadweight, down slightly from 195p/kg over the previous two quarters.

Feed costs have remained at 121p/kg, making up an estimated 62% of total costs. Feed costs are, however, down considerably from the peak of 175p/kg in Q2 2022, when feed accounted for 73% of total costs, and 139p/kg in Q1 2023. Energy and fuel costs rose slightly over Q4, which contributed to a slight increase in other variable costs.

Pig prices fell during Q1, compared to the second half of 2023, with the APP down 5p on Q4 to average 212p/kg over the three-month period. This resulted in a net margin of 18p/kg, compared with 21p in Q4 2023, and a still healthy net margin per head of £16.

Prices have remained remarkably stable moving into Q2. However, looking at a monthly breakdown of costs it is evident that feed costs started to come down towards the end of Q1, AHDB senior economist Jess Corsair said.

But she added: "It is worth considering that grain prices have been rising in Q2 which could impact feed prices and cost of production going forward."