29 July, 2009
| Capital cost of five sows (six-year lifespan, five-year working life): | £1,350.00 |
| Capital cost of one boar (six-year lifespan, five-year working life): | £350.00 |
| Capital cost of pig housing (over five years) | £2,215.00 |
| Capital cost of livestock trailer (over 10 years) | £1,000.00 |
| Total capital cost, annual | £883.00 |
| Running costs, annual | |
| Feed for five sows & 1 boar | £1,339.00 |
| Feed for 75 weaners to 11 weeks | £1,138.40 |
| Straw | £250.00 |
| Fencing | £500.00 |
| Insurance (60% of total premium) | £560.75 |
| Veterinary | £250.00 |
| Knacker | £84.38 |
| Disinfectants & detergents | £80.00 |
| Identification (tags, slapper ink, pliers, slapper) | £20.00 |
| Signage | £20.00 |
| Tools, water troughs, feed troughs | £400.00 |
| Protective clothing (waterproof overalls, boilersuits, boots | £65.00 |
| Electricity | £108.00 |
| BPA/RBST/BPBC memberships/Pigworld subscription | £120.00 |
| Stationery and postage, including movement forms, herd book | £80.00 |
| Brushcutter fuel | £30.00 |
| Diesel for Land Rover on pig-related journeys | £100.00 |
| Total annual cost, entire pig operation, ex-labour & tax | £6028.53 |
| Weaner production share of annual cost | £4,521.40 |
| Cost per litter | £602.86 |
| Cost per weaner | £60.29 |
| Price per weaner | £60.00 |
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We average 11.2 piglets surviving per litter.
On average, 10 weaners per litter are sold between 10-12 weeks (remaining weaners are finished as porkers).
On average, we sell 75 weaners per year.
Of our pig costs, 75% is attributable to the production of weaners, 25% to the production of porkers.
We do not include labour, a profit margin or taxes in the cost as we’re running a business-like “hobby” and not a business.
We aim to recover the costs of working the croft, while feeding ourselves from it and maintaining it.
If we were to run the croft as a business, the additional costs would be unrecoverable and we’d not be able to keep it on.
For example, if I charged for 60 hours labour per week at £6.20 per hour (the minimum hourly rate for agricultural workers in Scotland), I’d have to factor in a labour cost of £19,344 per year.
With the pig side of the croft taking up 60% of my time, that’s £11,606 per year with 75% of that to be met by the weaners—£8,704.80. or £116.06 per weaner.
That would take the cost of a weaner to £176.35. With vast numbers of potential customers believing that even £60 per weaner is unreasonable, I’m never going to recover the additional cost of labour.
If I added a profit margin, rates for the parts of the croft that would be deemed non-agricultural, taxes payable as business, and the higher cost of a business mortgage, the cost per weaner would get very close to £200.
The only way of reducing that cost would be to scale up enormously and produce hundreds, if not thousands, of weaners a year.
In turn, that would mean moving to a more productive modern hybrid pig, moving to an intensive, indoor operation, making more compromises on welfare, and generally becoming a huge industrial pig operation—and most of those aren’t that profitable anyway.
Back in January, the Guardian investigated industrial pig farming in the UK.
The investigation found that the UK’s intensive farms, with their higher welfare standards, produce pork for around 12 pence per kilo than their European competitors who have less stringent standards.
Does the average consumer buy the more expensive British pork with its higher standards? Of course they don’t, they opt of the nicely packaged but cheaper imports.
It’s the same for us.
Potential customers tell us they want a high quality, outdoor pig from a rare breed, grown slowly, and with high standards of welfare, but they are not prepared to pay a fair price based on the actual costs of producing that animal.
In fact, they want to pay a price that’s not only lower than our cost of production (ex-labour, taxes and profit margin), but lower than the commercial cost of production.
During the week ending 29 July 2009, the average price for a commercial, 30kg weaner was £56.68 (Farmer’s Weekly, 29 July 2009).
Our price for a birth-notified Berkshire around the same weight was £60.
Many customers—who like to tell us we shouldn’t be in pigs if we want to make money—continue to demand prices of £20-30 for a rare breed, outdoor weaner weighing 25-30kg at 10 weeks.
These very same customers are also vociferous in their dislike of supermarkets paying producers below the cost of production.
As the Guardian said, “welfare doesn’t come into it”.
Personally, I detect the stench of consumer hyprocrisy, greed and selfishness?
The diesel cost is quite low as we include the cost of collecting breeding stock in their capital cost. So, Daphne cost us £300 plus £200 for diesel. Graeme cost £200 plus £150 for diesel.
It’s all too common. I’m familiar with similar stories from farmers here in the States. I too am very conscious of costs for running my household, but I do want the meat we eat to be humanely raised and slaughtered, as well as fed a natural diet. The only solution I’ve been able to find is for us to eat less meat overall. We still eat a roast chicken on some Sundays, but at $15 for one bird, we have to make that the bulk of our meat for the week. Large cuts of beef are reserved only for *very* special occasions now, basically Christmas dinner. We mostly make do with bacon, stew beef, and ground lamb or beef, the rest of the time. Our own eggs have taken over as our primary animal protein however.
I wonder if you might mention the weight those weaners will dress out to, and what the going prices of pork cuts are in the UK. What kind of return on investment do your customers see? It would help round out the picture.
Very briefly, taking a finisher from 10 weeks through to slaughter at 28 weeks costs £77 in feed, £14 in straw, £30 for slaughter, £20 for butchering, and £15 in other costs.
Add the £60 price of the weaner and you’re looking at a total cost of £216.
A 28 weeks, an 80kg liveweight pig typically kills out to a 58kg carcass, and that then converts to 45kg of dressed joints, at a cost of £4.80 per kilogram.
We sell boxed halves of pork for £120, which is £5.33 per kilogram. The 53 pence per kilogram is the only margin we get on any of our produce and is invested back into the croft, mainly for the purchase of trees.
For comparison, Tesco (the UK’s dominant supermarket) sells organic pork chops for £8.59 per kilogram, conventionally farmed pork joints for £6.69 per kilogram, pork shanks for £7.74 per kilogram and “pork value shoulder joints” for £2.97 per kilogram.
So, if someone buys a weaner from us for £60 and fattens it themselves, they’re still ahead on cost and well ahead in terms of quality if they take a little care in how they finish their pig. Despite that, many people demand that rare breed pork be even cheaper. and have no scruples in expecting people like us to subsidise their food.
If we sold weaners for £25, we’d be giving the customer £35.29. To put it another way, the Other Half would be giving away £2,646.75 of her annual salary as that’s the only way we could subsidise the pigs.
Hello Stonehead,
I understand your frustration with Tesco. In Australia farmers have the same problem with two dominant supermarket chains squeezing them on margins.
Can you increase you capacity by partnering with one of your neighbours?
Do you have an establish a farmers co-operative or a farmers market in the district that you directly supply? These may not bring higher prices but they should be regular sales and a better cashflow.
How much does it cost to freight a boxed half a pig?
And then again…. if you were to ‘upsize’ your outfit, you’d probably have even more ‘no-shows’.
I just cannot understand the mentality of folk who go to all the hassle of ordering animals and then drop off the radar when the time comes to collect them!
I’m glad you did the pricing exercise, though, and I really hope the miserable so-and-sos drop by to read about themselves and what they have lost!
Here’s hoping some genuine purchasers turn up soon
I do the costings whenever there’s a major change in one area or minor changes across several. The latest costing was prompted by receiving notice of our new insurance premiums and a further rise in the price of feed.
And then again…. if you were to ‘upsize’ your outfit, you’d probably have even more ‘no-shows’.
You know, I’m not so sure about that. If charging break-even prices isn’t working, maybe it might be worth considering charging boutique prices–especially since you’re selling a boutique product. (Then again, do people who buy into the idea that high prices = better product fatten their own pigs?)
Pedigree, rare-breed pigs are effectively a “boutique product” anyway, especially in Scotland. A quick look at the British Pig Association’s list of birth-notified weaners (0-14 weeks) available in Scotland this weeks returns:
* 22 Gloucestershire Old Spots in Aberdeenshire.
* 11 Berkshires in Aberdeenshire (one of our litters, the other isn’t registered yet).
* 22 Large Blacks in Roxburghshire.
* 5 British Saddlebacks in Wigtownshire.
That’s it.
Other people may be advertise “Tamworths”, “Gloucester Old Spots”, “Berkshires” in the local press, but if they’re not birth-notified animals from registered sires and dams they’re most definitely not the real article with provenance.
God, I’d be tempted to send people that financial breakdown when they complain about the cost of a weaner!!
I take people through the costs but many either disbelieve them or dispute that they should be included. I’m often told the breeding pigs are “free” if I breed them myself, that housing and fencing as just “one-off costs” that you have to accept when keeping pigs, and “why do you include postage—pigs don’t write letters”.
Good idea, Shelley!
World-wide, Canadians spend the least amount of their annual incomes on food, and still we complain about food being ‘too expensive’ in the grocery store! No one is paying the ‘true’ cost of food anymore. Beef prices in Canada have not risen in 50 years for the farmer, only the cost of production has.
HDR
For what it’s worth, I’m a townie but I love reading your blog. I’m also a bookkeeper (think accountant and then lower your expectations) so your costing was very interesting – love the description of “pig related journeys” – I suppose those people who think pigs don’t write letters will also protest that pigs don’t drive (to which you could reply **sotto voce** “No, but they might fly.” Sorry, I digress.
I work with sole traders who have similar problems – in fact, I get them myself: the customer wants quality but invariably wants a cut price deal. Several of these sole traders have recently decided that the only way to go is to seek a different kind of customer altogether, i.e. go “high-end”. How viable would it be for you to cut down your piglet production but instead of selling them on, keep them right up to slaughter and sell the meat by mail/web-order as a top end product? I’m already cringing at what that would mean in terms of beaurocracy but it’s seems your current lot of non-customers don’t appreciate what they are getting and maybe that’s because the price is low? I’m not offering advice so much as trying to work out what goes on in the world of business.
Personally, I tend have high expectations of bookkeepers and low ones for accountants. Bookkeepers, in my experience, tell you how you’re functioning (the foundations are solid but you’re losing it out the windows) while accountants tell you how good you look (yes, the windows aren’t quite what they could be but that chandelier is exactly what investors are looking for this year).
Back on the pigs, and we can’t finish moderate numbers of pigs ourselves. The two hurdles are lack of land and lack of a market. We’d need considerable more land to fatten even a litter every other month. Finishing six to eight a year is about the limited, with our Virtual Pigs really pushing our land to the limit earlier this year,
There is a market for pedigree, rare breed pork but you need to be close to a large urban area with a fair degree of affluence or on a well-used tourist route used by the affluent. We’re not in either of those positions, although some of our customers are.
Mildly off-topic Stoney – which book, if any, is your preferred reference tool re: pigs?
Have you thought about getting in touch with the Bruce family who run Bruce farm Machinery. They also have a farm shop and market their own beef and lamb products may be worth speaking to them about them buying pork/ pigs from you. Worth a try
While watching country file another idea came to me with getting extra pig income
Pig keeping courses
Most of them are rip-offs that simply indulge customer fantasies. Yes, I could do them. Yes, I could make money from playing to the fantasy. But do I want to? And if I did a more honest, practical course that spelled out the real costs, the real workload, and the real skills needed, would many people pay for it? And how many would actually turn up on the day.
It’s a stark choice between adopting the approach that would “work” and make money, and doing that something that has more honesty and integrity but doesn’t make money. And like it or not, as things stand it does come down to money.
Anyway, I’m supposed to be de-stinking myself in a probably impossible bid to make myself presentable for the school’s “meet the teacher” day.
I sympathise with your predicament. I keep freerange pigs in Ireland, about 20-30 minutes from Dublin city center. So…I have a huge market right on my doorstep and I find it extremly difficult to create interest..I think my problem is that there are just not enough people that know about me and my pigs. Also, I am beginning to think that there are not a lot of people who know there is such a thing as freerange pigs!!
I found your costings very interesting indeed (frightening even).
I charge 100euro per weaner as I have to and I suppose I am lucky in that there are not a huge amount of people breeding pure bred (BPA registered) pigs in the Republic.. however, this means that it is very difficult for me to find a suitable boar for my ladies. I would keep a boar but I am very much constrained by space..I charge 9euro per Kg for pork, which I also think is almost on a par with supermarket crap pork (if you discount the special offers). Only for I love working with the buggers, I’d give them up and have more time for fishing!!
Good luck.
I hope you don’t mind Stoney but I am sending a link to this blog post to folks who complain about/don’t understand the cost of weaners… must spread the word! Thank you for doing this.
It’s gone up a lot since then and will go higher this year. But I’ve had emails from two people in the past week telling me that £60 is greedy and unjustified when you can get “coloured” weaners from marts for less than a fiver.