New cost figures show margins remain positive

The latest AHDB/BPEX estimates show the cost of pig production in the second quarter of 2014 averaging 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,” according to BPEX, “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 expected to be lower than those in quarter two. As a result, despite the recent fall in pig prices, the conclusion to date is that “most producers should still be making positive margins”.

The new AHDB/BPEX figures, which cover the first two quarters of 2014, will be published each quarter from now on, 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 into 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 said they were always seeking to improve the quality of the information published and that the new methodology provided a better estimate of production costs. 

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