AHDB Pig Market Weekly
05 December 2016
Will weak pound make GB pig production competitive?
Despite a 6% decline on the year-earlier figure, GB production costs were the second highest of all member countries in 2015, according to the latest pig production costs report from InterPIG. This meant GB producers made a net loss last year, despite the maintenance of a pig price premium. However, the economic situation has changed significantly since last year. Not only have pig prices been rising but sterling has declined significantly against the euro from its strong 2015 position. If the pound had been weaker last year, how might this have impacted the GB position within the InterPIG group and what might this imply for British producers this year?
New analysis shows that applying the current exchange rate to 2015 production costs transforms the GB cost to be slightly below the EU average. This is not intended to predict how the situation might look in 2016, not least because the exchange rate will also have increased input prices in GB. However, it does demonstrate the capability of a weaker pound to significantly increase the competitiveness of GB pig production, relative to other European countries.
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