Rising production costs push losses to three-year high

Production costs are rising again after having fallen throughout most of last year, according to AHDB Pork.

“Costs rose in the second quarter of this year, meaning that despite some recovery in pig prices during the three months, average producer losses were similar to those in the first quarter,” said AHDB Pork.

“At 132p/kg, the average full economic cost of pig production was 3p higher during the second quarter than in January to March 2016.

Nevertheless, costs remain low by historic standards, with the last time, before this year, that they were below this level was in 2009.

“The increased costs in the latest period were largely due to higher feed prices, following rallies in global soya markets, in particular,” said AHDB Pork, adding that the latest cost/price balance has left producer margins “slightly worse” in April to June than in the previous three months.

“On average, producers are estimated to have lost 12p/kg, equivalent to around £10 per head, during this period, representing the worst losses for producers since early 2013.”

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