Gilt Edged Return

by 5m Editor
29 March 2012, at 12:51pm

UK - Buying Government gilts in most countries is a safe and sound investment but without spectacular returns however the challenges in the Eurozone now mean that even these are not without risk, writes Tim Rymer, Chairman of JSR.

In the UK pig industry there is currently a gilt that is not only a safe and sound investment but is producing spectacular returns - the JSR Genepacker Gilt.

Tim Rymer, Chairman, JSR

JSR pigs

In financial markets there is a method of investing called Arbitrage – taking positions in 2 different markets when the movement between the two is in favour of the investor. UK pig producers can use Arbitrage right now to improve returns. The two markets are the Cull Sow and Gilt Replacement markets. With cull sow prices at 125p/kg a 150kg sow could make the producer 3187 and considerably more on heavier cull sows. With parent gilt prices not much higher, produces have never had a better opportunity to replace old stock for new with minimal outlay.

Whilst replacement rates have steadily risen to 50% some leading JSR customers are now targeting 60 per cent to keep herds young. After 5 litters producing up to 70 piglets, producers can replace the sow with a new gilt to start the process again, virtually getting their money back. Now that is a gilt edged return.

Giles Christie, JSR UK Sales Director comments ‘right now it is a great opportunity to replace older parity and problem sows, such as repeat returners. We all know returns usually have a conception rate of ~50 per cent compared to 90 per cent for non-returners.

This reduces productivity and costs money. This is more of a problem during the summer months when it is widely reported that during late August and early September there are larger amounts of returns to service, which is repeated again in mid to end-October. The majority of these returns are the older parity and problem sows. To overcome this problem JSR recommend that more gilts are served from mid-July onwards, for a 12 week period. In order to meet these targets producers need to increase their input of gilts 8-9 weeks prior ie from May onwards. Yet again another reason to have more gilts for service to avoid dips in herd performance. These dips in performance are costly to the producer, affecting cash flow within the business.

At the moment the cost of the genetic premium for breeding gilts is typically only 50p per slaughter pig. This is real value and producers should act now while prices are in their favour.