Producer margins positive in Q3
According to the latest AHDB estimates, the average cost of pig production in GB during Q3 was 147p/kg.
This was 1p lower than the estimate for the previous quarter, driven by slight falls in feed and breeding costs. Falling breeding costs reflect rising returns from cull sow slaughter.
At the same time, pig prices rose between July and September, returning producers to a positive margin, on average. The APP averaged 155p/kg during the three months, meaning producers made a positive margin of around £7/head (9p/kg) during the quarter.
The picture remains positive for producers. Since September, pig prices have continued to rise while grain prices have remained relatively low. The APP is now nearly 160p/kg, and so for many producers margins will have improved further in recent weeks. Strong demand on the export market, due to the Chinese ASF crisis, means profitability may well continue to improve into early 2020.
Between mid-2018 and early 2019, GB producers lost an estimated total of £48 million. In the latest quarter, producer profits amount to around £16 million. The better financial position of producers will need to be sustained for several more months to offset the most recent loss-making period. Nevertheless, over the past four years, producers have made a net profit of around £3/head, approximately £108 million.