England's Pig Farm Profitability Falls 24 per cent in 2014-15

UK - Latest findings from the Farm Business Survey (FBS) highlight the continuing financial challenges facing pig farms as incomes in 2014-15 fall 24 per cent across the sector.
calendar icon 16 May 2016
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Rural Business Research (RBR) the consortium of universities and colleges who carry out the FBS sample almost 4 per cent of pig farms in England. These include specialist breeders, specialist finishers and contract rearers.

“Every year we always see a great variation in economic performance between the pig farms in the survey, and 2014/15 was no different, explains Lucy Peacock from RBR. 18 per cent of pig farms lost money, with an average negative Farm Business Income (FBI) of -£17,427 for the bottom 25 per cent performance group. In complete contrast to this, the top 25 per cent had an average income of £194,987.”

These high income farms are significantly larger than the others in the sample, with a pig output ten times larger than the middle 50 per cent band. Generally we notice that the smaller size farms have higher costs per output, and a lower total output. Worryingly, the gap in profitability between farm size groups is growing year on year.

Across the sample, 2014-15 saw a reduction in total output, as a result of falling pig prices- the average per kilo price dropped 22.7p/kg in the year. The fall in output was slightly offset by a 16 per cent fall in paid labour and a further 17 per cent fall in contract machinery costs, across the sample.

“This could be a one off trend amongst the participating farms, but it suggests that as margins tighten farmers are taking on a greater level of workload themselves and reducing reliance on labourers and contractors.”

Feed prices also fell by 12 per cent, but continue to make up a significant proportion of total costs- on average accounting for 81 per cent of variable costs and 46 per cent of total farm output.

Breaking down the sample into different types of production, both contract rearers and breeder/finishers averaged a positive net margin, indicating that the poorest performers are not limited to a particular production system. However, both groups saw dramatic year on year falls in net margins; dropping 37.6 per cent for breeders but 62.6 per cent in the contract rearing category.

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