Despite increased demand and sales of British pork, soaring costs of production coupled with Scotland’s main processing plant at Brechin losing its export licences to send product to China – is hitting pig farmers hard.

The abattoir at Brechin was closed in January for almost a month as a result of Covid-19 incidences and while the processing plant is back in operation, it has only been functioning three days a week since April due to the loss of exports and with no sign of a licence being renewed.

Add to that spiralling costs of production, with feed prices now well in excess of £250 per tonne and farmers are losing money fast.

Latest figures from AHDB show that pig production costs rose a massive 10p per kg in the first quarter of 2021 to 174p – the highest level since such records were documented. Most of these costs are attributable to ever increasing feed costs, which during the first three months of the year were the highest on record at 117p per kg.

More worrying is the fact that while ex-farm prices are on the up, with last week’s average standing at 153-155p – compared to production costs of 174p – producers are well out of pocket and to the tune of 14p per kg or £18 per head.

“Pig producers have never seen feed costs as high when grain prices are in excess of £250 per tonne and soya and minerals are already well above that and continuing to rise,” Andy McGowan, managing director of Scottish Pig Producers, told The Scottish Farmer, adding that values are unlikely to slip significantly in the coming months.

“Sourcing soya is always going to be a problem when China has an insatiable demand for it and is buying as much as possible. There is more chance of grain prices becoming more realistic when the world wheat crop is expected to be higher this year, but weather patterns and changes in government policy across the world, mean futures markets can change at the drop of a hat.”

Of more concern to Scottish producers who have seen significant improvement in herd performance in recent years, is the loss of exports to China and the fact that the new pig processing facility at Brechin is only at 70% capacity.

“China takes half of the world’s pigmeat and took almost 25% of the throughput at Brechin up until Covid-19 resulted in the closure of the plant and surrender of its export licence. It is only China that can authorise a licence and so far, nothing has come through.”

“Scotland badly needs a decent processor for its pig industry – if there is not one in five years time, pig producers will be seriously questioning the sustainability of the sector north of the Border,” said Mr McGowan.

Ironically, demand for pigmeat in Scotland has improved significantly over the past two years, which Mr McGowan believes is as a result of the phenomenal growth in home meal kits and latterly, as more people look to holiday at home as a result of the Covid-19 pandemic. Rising temperatures are also boosting sales as more people look to eat outside and entertain at home with barbecues.

Pig prices are also continuing to head north with the latest EU-spec' SPP up 2.24p to 155.0p3/kg – the 12th consecutive week of increased prices, with the latest figure now 17p per kg higher than the low point of mid February but 9p behind this time last year.

Supplies are described as being tight, with estimated slaughter during the week similar to the previous seven days, at 180,000 head – 12% higher than a year earlier, with carcase weights at the lowest level of the year to date at 86.55kg.

The EU-spec APP also recorded an increase in the week ended May 22, rising by 1.33p to 155.22p/kg. This is the highest price since early December and widened the gap between the APP and SPP to 3.48p.

The latest average pig price, for the week ending 23 May, was €160.85/100kg – the highest level recorded since June last year.

All major producing member states recorded price increases to varying degrees. The French price rose by €11/100kg in the four weeks to May 23, while the Dutch price increased by just under €1/100kg in the same period.