Following a year of stability and marked improvement in ex-farm finished pig prices, UK producers are now making a decent margin with prices up 30% on the back of a reduced national herd.

Latest figures show that on average, producers recorded a profit of £16 per head during the first quarter of 2024 – the fourth successive quarter of positive margins, averaging £20/head, after a net margin of £19/head in Q4 2023 and £22/head and £25/head respectively in Q2 and Q3.

The figures from AHDB, follow 10 successive quarters of losses, which exceeded £50/head during the first half of 2022, with total industry losses estimated to have exceeded £750m over that period.

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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, according to AHDB’s figures.

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.

“There has been some remarkable stability in the market and I can’t see that changing significantly in the future,” said Andy McGowan, managing director of Scottish Pig Producers.

“The industry is now in a better situation as our customers in the supply chain recognise the damage that was done when prices were so low and appear to have learnt their lesson.

“There is some rebuilding going on, but when the UK herd is down 15%, there is a shortage of pigs and a decent demand for pig meat, its all good for producers. I also think the retailers now realise they can’t expect farmers to make long-term investments on farm and then shaft them with prices below the cost of production,” said Mr McGowan.

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. Additionally, with grain prices rising, costs of production could be affected going forward.