UK pig producers posted healthy profits during the third quarter of this year on the back of falling costs, according to new analysis by AHDB shows.
Average UK pig margins increased from £15 per head in the second quarter of this year to £19 per head in Q3, figures by the levy board show.
Average prices remained steady over the third quarter of 2024, at 212p per kg (APP), in line with the first two quarters of the year.
But costs fell by 5p per kg to average 190p per kg, increasing the average net margin from 17p/kg to 22p/kg, with margins per slaughter pig estimated at £19.40 per head and 21.90p/kg deadweight.
Although lower than Q3 2023 figure of £25/head, this was the sixth successive quarter of positive margins, and an improvement on the Q1 and Q2 figures of £15/head and £16/head, respectively.
This period of relative stability and profitability followed ten consecutive quarters of negative margins, peaking at minus £58 per head in Q1 2022.
Feed costs dropped back by 5p to 116p/kg in Q3, the lowest figure since the end of 2020, making up just 61% of total feed costs, the lowest proportion since early 2020.
At the peak of the pig crisis during Q2 2022, feed costs averaged 175p/kg, representing 73% of total costs, before falling to a more manageable 120-123p over the previous five quarters.
Energy and fuel prices and building and finance costs also eased throughout Q3, although there has been a slight rise in other variable costs, including breeding and veterinary costs and maintenance costs.
However, pig prices have fallen during the current quarter due to a combination a higher supplies and mainly a big decline in EU pig prices over the past few months.
For the week ending October 26, the APP stood at 208.14p/kg, while the SPP dipped below 207p/kg during the first week of November.
Although prices are now around 11p lower last year, they remain around 6p/kg above the same week in 2022.
However, costs remain manageable, suggesting that producers, on average, will still be comfortably in the black.
Freya Shuttleworth, AHDB's senior analyst, said with producers now estimated to have recorded six consecutive quarters of positive margins, industry sentiment had improved.
Although many farms would still be recovering their finances after the challenges faced in late 2020 to 2022, she said there had been positive reports of on-farm investment, especially new breeding stock and updating of buildings and equipment.
However, Ms Shuttleworth identified a number of uncertainties on the horizon for the UK's pig sector.
She said: “With EU pig prices falling there is risk of import volumes to the UK increasing and pressuring prices on the domestic market."
Heightened geopolitical tensions were also likely to impact global market dynamics in the coming months, she added.
“Closer to home, last week’s government announcement that the UK farming budget is to remain the same, will result in reduced spending by Defra in real terms due to inflationary pressure.
"This could impact on grants for further on-farm investments to improve efficiency and sustainability or adjustments to any new welfare regulation proposals.
“Alongside this was the change to inheritance tax, highlighting the importance of proper succession planning for businesses of all shapes and sizes.”
