Pig producers in England and Wales have endured seven successive quarters of negative margins, and cumulative losses are estimated at £600m since autumn 2020, AHDB figures show.
The levy board’s latest cost of production estimates show producers faced losses of £52 a finished pig during the second quarter of 2022.
With standard pig prices hovering just below 200p/kg, but cost of production estimated at 223p/kg for August, pig farmers remain in a dire situation.
A worrying contraction in England’s pig breeding herd illustrates the pressure the sector is facing and raises concerns for the future of domestic production and supply in the run-up to Christmas.
This year, the total number of pigs in England decreased by 3% to just over 4.1m animals, according to Defra’s June survey of agriculture.
This is largely driven by an 18% fall in the number of breeding pigs, while fattening pigs fell by 1.4%. The female breeding herd dropped to below 261,000, compared with 313,000 in June 2021.
Pig crisis in numbers
- England’s female breeding herd dropped to below 261,000, compared with 313,000 in June 2021 – the lowest it has been in 20 years
- £600m – the estimated cumulative losses for pig producers since autumn 2020
- 240p/kg deadweight – the estimated cost of production for Q2
- £52 – the estimated losses per finished pig for Q2
- 22 months – continuous loss-making period for pig producers
Sources: AHDB, Defra
Yorkshire-based pig vet Duncan Berkshire fears the situation will get worse if the standard pig price improves and more producers can then afford to pay off debt and exit the industry.
“We haven’t seen all of it yet [contraction], there is still some to come. At some point, we are going to reach a threshold where some of those people who are massively in debt will end up being able to afford to go out,” he says.
“I think we are going to have a second wave of people looking to close their pig farms. We’ve seen the acute cut in the breeding herd now, but I think we are going to see a little bit more over these next six months.”
Mr Berkshire says he is not surprised major pork processor Pilgrim’s UK is planning to close two sites – at Coalville in Leicestershire, and Bury St Edmunds in Suffolk – as well as move to a four-day week at its Ashton plant.
“We haven’t seen the biggest impact yet, which is going to be on the finishing pig numbers, because it takes six to eight months for everything from the breeding herd to filter through to give us our census on the finishing herd.
“There just aren’t going to be the pigs to come through there.”
Dorset pig and arable farmer Robert Lasseter summed up the current situation in the pig industry in one word – “dire”.
Mr Lasseter said the lowest price he had sold his pigs for in the crisis was £87 each. Through his marketing group, he is now selling his pigs for about £150 each, which he says is still “nothing near enough”.
Since the war in Ukraine, he has seen a dramatic increase in feed price – by far his largest cost. Mr Lasseter’s feed supplier has told him his costs are going to increase by another 10% from 1 October.
“If the November 2022 wheat price is £260/t, the pig price needs to be £2.60/kilo,” he says. “But we are sending pigs at £1.97/kilo. The sums don’t add up by a long way.”
Labour remains his biggest concern. He needs two full-time staff members, but can only find one.
Mr Lasseter said the government’s UK-wide review of the pig supply chain, which was finally launched in July, could not come soon enough.
“The government has got a role to play to make sure the pig supply chain operates fairly,” he said.
“I don’t think it is unreasonable to have written contracts like they have in dairy, or when you sell your wheat to a grain store.
“I also think that the contract needs to be relatively long term, so that a processor can understand its supplies and know that, if they are making changes to abattoirs, they have got security of supply.”
Mr Lasseter is concerned that independent pig farmers are leaving in droves and he thinks the pig industry’s problems will be long term.
This concern is shared by NFU Scotland vice-president and pig farmer Robin Traquair.
“We haven’t seen any census results as yet so we can only go on anecdotal results, but I think the reduction we’ve seen in England will be replicated in Scotland as well. We’ve seen quite a few herds go out.
“A good friend of mine who had 2,500 sows has cut back to 1,600. It’s a big hole for the farmers to get out of.”
Mr Traquair said volatile prices for barley, wheat and soya, coupled with soaring energy costs, had left many pig producers in trouble.
“I worry about moving forward because our government will want higher welfare, we don’t know what the detail is yet, but if we are still in a big hole from debt and we’ve got pressures on us to improve welfare, which all farmers want to do, it is very difficult if we haven’t got the cashflow.”
The Scottish government has just removed £33m from the agricultural budget this year and Mr Traquair says it looks unlikely pig producers will receive any further support.
With farmers reporting a fivefold increase in electricity bills, the NFUS vice-president welcomed the UK government’s commitment to help businesses with soaring energy costs, but said further detail was needed.
Northern Ireland update
In Northern Ireland, Daera farming minister Edwin Poots has instructed officials to draw up plans for further assistance for the pig sector, which he says faces a perfect storm of trade disruption and input price hikes.
NI pig producers have already received £2m of support in a previous aid package to help offset the impact of the Covid-19 pandemic.
A Defra spokesman said: “We are acutely aware of the challenges currently faced by the pig industry and appreciate that all farmers face rising costs due to international circumstances.
“Through our Supply Chain Fairness review, we want to hear from industry about improvements to fairness and transparency that could be made to ensure a profitable and productive future for the sector. The consultation closes on 7 October.”
Q&A: Lizzie Wilson, chief executive, National Pig Association
Lizzie Wilson was appointed as the new chief executive of the National Pig Association (NPA) in August, having worked at the organisation since 2011.
In her first interview with the farming press since her new appointment, Ms Wilson outlines her hopes and fears for the UK pig industry and how it can emerge from the current crisis.
How would you describe the present situation in the pig sector?
A: It’s still very poor. Pig producers have been losing money for two years now.
It has eased a little bit in that producers aren’t hemorrhaging £50-60 a pig any more. But they are still losing on average just under £30 a pig, according to AHDB figures.
The pig price is unprecedented, at just under £200p/kg, but cost of production is very high. In total, we have lost more than £600m since October 2020.
The wheat price has come back a little bit, which has helped. But we now have issues with energy prices.
Producers are quoting their bills being quadrupled; for an average 750 sow breeding unit, weaning to 30kg, their energy costs were £55,000 last year but it is now £220,000 this year.
What are the prospects for pig farmers in the run-up to Christmas?
A: No one can really predict what Christmas is going to look like.
Producers have hung on throughout the summer waiting for pigmeat prices to increase. But many will be having to decide now whether they remain in business or not.
Supply is going to tighten and you would hope this will push prices up. But demand is not really there, and EU imported pigmeat is much cheaper.
If retailers can’t get hold of British, they may look elsewhere to the EU, especially if it is far more attractively priced.
The latest data from AHDB Pork Watch for July looked good and it showed 86% of supermarket pork product facings found in store were British.
We need continued support for British from retailers and we need consumers to buy British. In fact, British pork is still very competitively priced against other meat proteins.
How can pig farmers achieve more fairness in the supply chain?
A: There is an ongoing Defra consultation on Contractual Practice in the UK Pig Sector, to which we will be submitting a very comprehensive response.
We are encouraging as many of our NPA members to respond as well. We have just released guidance to help producers.
We don’t want producers to be dictated to as contracts are commercial agreements between them and their buyer.
We would like to see a code of conduct and certain principles included to ensure there is fairness against any sort of abuse and certain parties reneging on their responsibilities.
Currently, the supply chain doesn’t function properly. It doesn’t serve or sustain any of the links within it, and we think government should intervene.
We will be submitting various points on retailer behaviour because the abuses of power very often come from the top.
Are you optimistic, pessimistic or neutral about the future of pig farming?
A: Probably neutral. There are so many different elements at play. New pirme minister Liz Truss has made the right noises of late, but the proof is in the pudding, I guess.