Producer highlights why soaring costs mean pig price must go beyond £2/kg
5th Apr 2022 / By Alistair Driver
A pig producer has highlighted the impact of soaring input costs on their business to demonstrate why the pig price needs to increase beyond £2/kg to safeguard UK pig proiduction.
The anonymous pig farmer, with an indoor herd, said feed accounted for approximately 65% of their costs:
- Cereals account for 60% of the diet, and the increase from £200/t to £300/t since the start of the Ukraine war represents a £60/t rise in finished feed cost.
- Soya, at 10% of the diet, has increased from £300/t to £500/t, representing a £20/t per tonne feed cost hike.
- All the other oils, fats and supplements have risen in tandem.
- Many producers will be facing £100/t feed increases, or over £25/pig for finisher feed, plus over £5/pig on sow feed increases. Costs are rising daily.
The feed situation is made much worse for the many farms that have been feeding large backlogs of pigs. In many cases, the overweights have been contained by feeding low density specification diets taking 7-10 days longer to get to slaughter.
These diets, largely comprised of wheat-feed, adding 10 days of feed cost at an FCR of 4:1 on very heavy pigs, have added approximately £1.20/pig/day.
For a producer with 1,000 pigs backlogged, that equates to £1,200/day, for ‘lairaging’ pigs on farm.
“The alternative is a penalty for an overweight pig at £60 plus per pig or very heavy pigs that are not paid for at all. It is imperative that this is rapidly resolved,” the producer said.
Electric, fuel and haulage are all, generally, relatively minor costs but in current circumstances, they become very significant because of the size of the increases and how this impacts already massively stretched margins, further exacerbating losses.
For example, a typical 700 sow unit with good production levels (28 sold/sow/year), electric heating in farrowing house and nurseries, and fanned buildings on a commercial tariff could see costs rise from £2.25/pig, £44,100 in total, three-fold to £6.75/pig, £132,300. That is an increase of nearly £90,000.
Diesel price increases affect cleaning-out processes, slurry and manure handling and haulage to factory. The farm’s straw-based systems, 2 and 3 stage production and distance from the factory makes these cost increases significant.
Feed and livestock are hauled big distances. In many European countries, haulage to factory is short distances and costs picked up by the processor.
The producer concluded: “Faced with little prospect of respite from the above and potentially more upside in cost rises, producers need immediate relief or the processors risk a significant swathe of the industry exiting to contain their losses.
“This is a true test of the supply chain. Processors calling for immediate price rises have it within their gift (from their profitable businesses) to address this immediately.”