A panorama of production costs: how costs compared in 2006

InterPig releases data from its analysis of 2006.

Pig production costs are compared on an annual basis by a Europe-based grouping that has the name InterPig. Currently this involves institutes and organisations in 10 countries belonging to the European Union (EU) who share cost information each year. Others who have joined from outside the community within the past year are Brazil, Canada and the USA.

Data from their analysis of 2006 costings have now been released. At a conference for pig producers organised by Irish farm development agency Teagasc, for example, an InterPig indication of a year-2006 total production cost for Ireland of €1.36 per kilogram carcase weight was contrasted with figures of €1.47 for Britain, €1.38 for Germany, €1.29 for France, €1.27 for Denmark and only €1.20 for the Netherlands.

This is an obvious comparison to make inside the EU because the Danes and others are major producers, the conference was reminded. But costs from InterPig for countries outside Europe underline the strength of the competition internationally. They are presented on a chart covering Brazilian, Canadian and American figures as well as those for EU states that have appeared in '2006 pig cost of production in selected countries', a publication from British Pig Executive BPEX*. The supporting commentary by MLC's Tony Fowler explains that whereas production systems in most of the EU members are similar enough to allow meaningful comparisons, the exception is Italy because of the high (130kg) carcase weight needed for the Italian ham market. Otherwise, the chart contained in the booklet suggests that European costs compared with those of Brazil — often considered the cheapest producer of pigmeat on the world market.

Presenting an apparent national average cost in each case has its drawbacks. The Teagasc meeting in Ireland was told that the agency's recording scheme PigSys had shown its herds as averaging €1.23 per kilo in 2006. The scheme's participants that year represented only about 30% of the national herd, said farm adviser Michael Martin, but they were probably among those nationally that were in the upper rank for performance.

The composite feed price for these units in 2006 was €211.65 per metric ton when including the use of by-products and of home-mixing. It gave them a €0.796 feed cost per kilogram of pig. This has changed sharply since then, of course. Michael Martin said the increase for purchased compound feed to €244.40 per ton by July 2007 from €212 in 2006 would have increased the Irish feed cost to 90.6 Euro cents per kilogram.

The InterPig data for 2006 highlighted the contrast between countries on composite price per ton of feed and the feed cost per kilo of pig produced. For the main EU pig-producing countries the feed cost per kilogram deadweight in 2006 was about 65 Euro cents, Mr Martin reported.

From the BPEX booklet in the UK, the extent of the change in feed cost per kilo between 2005 and 2006 differed for the European countries despite their similar ingredient prices. The recorded changes went from minus 2% in Denmark to increases in the range of 1-3% in France, Ireland, Belgium, Britain and Germany. Rises of 5-8% were recorded for Italy, Austria, Sweden and the Netherlands. But producers in the USA and Canada are shown as paying much more for feed in 2006 than 2005: by 11% for US herds and 13% for the Canadians.

Some of the substantially higher feed costs per kg deadweight that applied on Irish pig units were offset by lower figures for housing and other expenses, on the InterPig data. Labour is the single largest cost item after feed and this also had an Irish advantage. Teagasc PigSys Report 2006 showed a labour charge in Ireland of 15.5 Euro cents per kilogram produced. InterPig for 2006 gives Irish units an average of 15.4 Euro cents and suggests this was low for Europe, with Denmark at 15.5 cents/kg, the Netherlands at 16.5 cents, Germany at €0.177, France at €0.183 and Britain at €0.197.

As might be expected, InterPig found lower labour costs in Brazil, Canada and the USA than in the EU member states. Brazil's worked out at only about €0.044 per kilo. Its cost per hour of labour was only 7% of the 9-country EU average, so the cost/kg calculation stayed low despite the labour usage per pig in Brazil being put at more than 3 times the EU-9 average.

Both Brazil and Canada had much lower building costs than in the EU, the BPEX booklet points out. For healthcare the analysis by InterPig found quite similar costs between the EU countries, but a considerable variation concerning their spending on energy, manure handling and repairs. As Mr Martin noted in Ireland, both France and Britain reported low energy costs per kilo. French electricity prices are low, he commented, while outdoor herds represent a significant component of British production and may account for Britain's relatively low energy costs.

(*More details of Cost of Production in Selected Countries are available on www.bpex.org.uk)

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