Drop in farmgate pig prices, as productivity improves

UK farmgate pig prices are around 16% lower than last year in a “challenging” market, according to the latest research by Quality Meat Scotland (QMS).

A number of factors are at play, causing lower farmgate prices according to Iain Macdonald, Economics Analyst at QMS.

“The most significant of these have been on the supply side. Indeed, at the UK level, 2014 was the fifth consecutive year of increased pig slaughterings and the number of pigs slaughtered was at its highest level since 2002,” said Macdonald.
“Once you factor in heavier carcase weights, at 862,100 tonnes (t), UK pigmeat production was at its highest level of the century. At the start of this year, weekly abattoir throughput is estimated to be running 7% ahead of last year.”  
This increase in supply comes despite UK census data, in June 2014, showing sow numbers were down 3.5% year-on-year at 406,000 head and compared with 2002, there were 28% fewer sows.

“These figures show how significant the improvement in pig sector productivity has been. Years of investment in improving herd health and genetics have seen a huge leap forwards,” said Macdonald.  
“With the cost of feeding each sow spread over an increased output of pigmeat, producers are therefore better placed to withstand a reduction in farmgate prices.

“Another factor contributing to lower farmgate prices is the European market. With the EU banned from exporting to Russia, one the EU’s biggest markets, there are increased amounts of pigmeat available.

“However, feed costs have also played their part. In late January, feed wheat was trading at less than £120/t at the farmgate, compared with £160/t a year earlier and £220/t two years ago.”

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