Production Cost Rockets

9 July 2012, at 9:09am

UK - The latest hike in international grain prices will have a dramatic impact on the cost of production for pig farmers, plunging the industry even further into loss, according to the British Pig Executive.

The latest cost of production figures produced by BPEX Market Intelligence show a loss of 318 per pig.

These figures do not take into account the full effect of the huge rise in grain prices. The futures prices for November stand at more than 3180 a tonne and for May 2013 they are approaching 3188.

All this means it costs producers about 170 to 175p per kg to produce a pig to slaughter weight, yet the price they are being paid is only 150p per kg.

Senior Analyst Stephen Howarth said: "Weather has been the main driver with hot and dry conditions in the US creating concerns over the yield potential of the US maize crop.

"The area planted is the highest since 1937 but, after a promising start, the crop has deteriorated in the heat.

"The most recent USDA crop condition report, published on 2 July, cut the share of crops rated good or excellent to 48 per cent, with 22 per cent poor or very poor.

"In the UK, the wheat crop had good yield potential at the end of June but the next few weeks are critical to grain fill and brighter weather is needed."

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