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Bethan Wilkins

Analyst

AHDB Pork Market Intelligence

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Producer margins remain positive

Home \ Prices & Stats \ News \ 2014 \ September \ Producer margins remain positive

Latest AHDB/BPEX estimates of the cost of pig production have now been published. The new figures cover the first two quarters of 2014 and, in future, estimates will be published each quarter, rather than monthly as in the past. The new estimates show that the cost of pig production in the second quarter of 2014 averaged 154p per kg.

Latest AHDB/BPEX estimates of the cost of pig production have now been published. The new figures cover the first two quarters of 2014 and, in future, estimates will be published each quarter, rather than monthly as in the past. The background information used to calculate the cost of production is reviewed annually and this year ways of improving it were identified. This included changes to the model to bring it in line with the internationally agreed approach used by InterPIG, a group of economists from major pig producing countries around the world. The changes to the cost of production model have been implemented from the start of 2014, which means that the estimates for this year are not directly comparable with earlier years. AHDB/BPEX is always seeking to improve the quality of the information it published and the new methodology does provide a better estimate of production costs. An explanation of the cost of production model can be found by clicking here.

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The new estimates show that the cost of pig production in the second quarter of 2014 averaged 154p per kg. This was slightly higher than in the first quarter of the year but was substantially lower than costs during the second half of 2012 and first half of 2013. At this level, costs were around 10p per kg lower than the average DAPP during the quarter, equivalent to a profit of £8 per pig. Producers have, on average, now been making positive margins for the last 12 months. With feed prices having fallen further in recent months, costs in the third quarter are likely to be lower than those in quarter two. Therefore, despite the recent fall in pig prices, most producers should still be making positive margins.