Gap between highest and lowest-performing pig farms closes as low pig prices hit sector

The gap between the best and the worst performing pig farms in England has fallen by 14%, according

The gap between the best and the worst performing pig farms in England has fallen by 14%, according to a report. - Credit: Archant

The gap is closing between the highest and lowest-performing pig farms in England after the whole sector was hit by falling pig prices and higher costs, according to a new report.

Latest analysis from the Farm Business Survey’s annual Pig Production in England report shows the gap fell by £30,500, or 14%, in 2016.

Researchers from the Universities of Cambridge, Newcastle-Upon-Tyne, Nottingham, Reading, Askham Bryan and Duchy College found that farms in the top 25% performance category earned an average of £122,200 per farm in 2016, in comparison to the worst performing category where the average pig farm lost £59,800.

The average pig farm income was £21,600 last year, the study found.

Rachel Lawrence, who is involved in the survey, said: “Although there is a huge difference remaining between the best and worst performing farms in the sector, that difference is getting smaller.”

Producers across the performance categories battled with falling pig prices and rising costs. Figures show that incomes fell by an average of 56% in 2016, with some of the top performing farm businesses hardest hit.

Farms in the top performance group saw turnover from pig sales drop 37%, while pig output from the lower performance groups actually increased.

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“This reflects more the nature of our sample,” she said.

“Independent producers are a lot more exposed to fluctuations in the pig market than those who are contract rearing or finishing. The falling pig price in 2016 hit those farms selling direct into the market hardest. The impact would actually have been more severe if many businesses hadn’t increased throughput through the year - pig numbers rose over 2% last year, despite the falling prices.”

Unusually, in 2016, the incomes for contract rearing/finishing businesses were actually higher than that of breeding units, a scenario not seen in the industry for a number of years. Herds that are predomonantly breeding units felt the full impact of falling pig prices, as turnover from pigs fell by 13%. Contract rearers saw management fees remain relatively stable despite signifcant increases to the wages bill.

The bill for wages and salaries totalled 12% of pig farm output in 2016/17, an increase of 26% on the previous year.