Calculating the cost of pork

Pork from a free-range Berkshire pig.

As we’ve just changed both abattoir and butcher I had to revise our pork costings.

The new costings are far from good when I look at them from a customer perspective.

The cost of taking a single pig from 10 weeks through to slaughter and butchering at 28 weeks works out at:

  • Cost of weaner @ 10 weeks: £60.50
  • Cost of feed from 10-28 weeks, 200kg used: £55.60
  • Cost of small bale straw from 10-28 weeks, nine used: £36.00
  • Contribution to other costs (fencing, troughs, tools, electricity, vet, etc): £25
  • Transport to slaughter: £35
  • Slaughter, meat inspection charge & statutory levy, butchering & packaging, delivery of pork, including VAT: £83.70
  • Total: £295.80

I haven’t included labour costs and margin, but the new cost is already well past the £250 we were receiving for a butchered porker last year. (Oh, and the quoted cost of weaner is last year’s. This year’s cost is likely to pass £65.)

We sell the pigs as butchered and boxed halves, with an average of 22.5kg in a box or a total of 45kg of useable pork per pig.

The new cost per butchered pig comes in at £6.57 per kilogram. It seems reasonable to me, especially with the cost of many inputs rising steeply and given that our small scale means we have inherent inefficiencies compared with massive industrial farms.

However, once I translate  the cost into a price per kilogram—which should be at least £7.10 with labour and margin—I know it’s reached a level that many potential customers will see as unreasonable. If potential customers though a boxed half pig was expensive last year at £125, what will they say if its going to cost £159.73 this year?

After all, they’ll say, supermarkets do shoulder joints for £2.00-4.00 per kilogram, leg joints for £5.50-6.00 per kilogram and chops for £5.00-6.50 per kilogram. Never mind the origins of that pork, the production methods or the poor return to the farmers who produced it.

The simple fact of the matter is that given a choice between locally produced pork from small, free-range, traditional breed herds and lowest common denominator pork from industrial farms, the majority of customers will always buy whichever is cheapest.

We’d managed to find a niche by catering for customers who wanted the local product and were prepared to pay more than the price of cheap supermarket pork but less than the price of premium, free-range, organic supermarket pork.

However, our pork price has to reflect input costs and that means our meat is moving past the price of premium supermarket pork.

Given that we’ve been selling weaners for less than the cost of production for six months and making up the difference from pork sales, where does that leave us?

22 Responses to “Calculating the cost of pork”

  1. I guess that leaves you to be innovative. And I don’t mean that in a sarcastic way. Just like every farmer or seller of goods before you, this is a time where you need to look at the whole operation and see where costs can be cut to ‘subsidise’ the cost of the pork. The market will only withstand a certain price for pork, set it at that and see where costs can be reduced or raised in other areas. Perhaps you could sell another product for a wee bit more or try and find something you already use for a bit cheaper.

    Of course, if the price in the market goes up then your customers may not mind paying the extra in this short term, knowing it may be cheaper next season. Loyal customers will still pay if they know they are getting quality and not being gouged. If you show them your cost, they may accept it.

    I wish you the best in this situation. It’s never easy, but if at the end of the day, you are happy where you are then it is worth it. You live in a beautiful location, side by side with mother nature. You are indeed fortunate.

  2. While I wish you the best, I don’t see how it can work.

    Prices will go up on your inputs, it is absolutely inevitable unless you head for GM products which defeats the purpose completely. And customers will always want to pay less for your end product. You are left dealing with the imbalance.

    That’s why we decided to avoid the customer altogether and only try to fulfill our own needs. Breed, raise and butcher our own livestock to avoid dealing with any off-site issues.

    Whatever you do, I certainly wish you the best. You’re one of the best homesteading/crofting blogs I have found so whatever happens, keep writing, okay! :)

    • We looked at going down the same route as you, but the croft needs to bring in some cash. I’m happy to take my wage in kind and am able to barter for some of things we need, but we still need money for things like fencing, seed, tools, etc. The pigs are the major source of that money, with the chickens and vegetables providing lesser amounts. Without something like the pigs, we won’t have the money to run the croft.

  3. Wow, that makes it hard to keep doing what you’re doing. And you haven’t even factored labour into the costs, so you’re working your butt off for nothing so that other people can eat your meat.

    I’ve just finished my first ever pigs, and costed out the whole operation here:

    http://green-change.com/2011/02/16/the-cost-of-raising-your-own-pigs-for-meat/

    Looking at the relative values your costs, I spent a lot more on feed (I know you grow some feed yourself, but I also sourced free day-old bread and greengrocer waste). But my slaughter/butchering was cheaper. I think those are what is hurting you most, and there’s probably no way to reduce that (other than scaling up, but that’s likely not an option!).

    Classic business advice would be to value add. Maybe you need to go all “River Cottage” and get into the charcuterie side of things. A whole line of Stonehead bacons, hams, salamis, rillettes, etc :-).

    • Yes, I’ve had loads of classic business advice. All of which ignores the fundamental issue: consumers believe they can have something for nothing. The more value that’s added to a product, the more it is going to cost and the higher the price should be.

      As for making bacons, hams and salamis, do you know how much work goes into making them on a small scale? Or how much it would cost to set up a production area that met all the regulatory standards? I make charcuterie for our own consumption but I don’t sell it because we’d incur phenomenal losses.

      As for the costs listed above, they are slightly simplified with quite a few things tucked into the “Contribution to other costs” category. Those other costs include many things that many small-scale or hobbyist pig keepers prefer to ignore: capital and running costs of trailers, capital and maintenance costs for housing, troughs, water supplies, tools, protective clothing, pig ID, disinfectant and detergents, paperwork, insurance, vets, medications, and more. In fact, quite a few pig keepers have told me I shouldn’t even include those in the costs as that’s just part of doing business and I shouldn’t be in pigs for money anyway. I can just imagine the likes of Tesco saying they’re not going to include the costs of their truck fleet, their property portfolio, their cleaners, their accountants, lawyers and management, their insurance, and so on in their costs!

      • Sorry, I meant that stuff about “classic business advice” and charcuterie to be tongue in cheek. I can only imagine how much additional regulation and inspection there would be around selling home-made preserved meats!

        I’m hoping that you stay in pigs, against all logic, because you obviously love it and I’ve learned a ton from following your efforts.

        Good luck on finding a way.

      • We won’t stay in it against logic. The pigs have to pay their way, which means they cover their costs, they pay their share of the croft’s running costs, and they give me a wage equivalent in pork, ham, bacon and manure. People think I’m joking when I mention manure, but it means we don’t have to buy in fertiliser and makes a huge contribution to the success of our fruit and vegetable crops.

        Anyway, back to the logic thing. I’m recalculating the cost of weaners at the moment. If, as I suspect, the cost is going to be somewhere between £65 and £70 at 10 weeks, then the already shortening queue of customers will dry up. We have been subsidising the current price of £60 from the margin of pork sales but can’t do that any more. Weaner prices will have to rise.

        Most, if not all, of our remaining customers won’t stand for that. They can just about stomach £60. As for potential customers, they don’t accept the current £60 price—they believe prices should be £30-35 or less. And never mind that the number of pig breeders has been contracting dramatically for the past two years.

        The solution? We shoot the pigs and piglets, with the exception of the two porkers going next week and a final pair that we keep our own consumption. The Berkshire Pig Breeder’s Club is very upset with me already for alerting them to the possibility as we have one of the oldest and most endangered female bloodlines. But as I’ve been saying here and elsewhere, if the pigs don’t pay, they have to go because we are not going to subsidise the cost of production just because customers demand cheap pork. In fact, the more farmers, smallholders and crofters who say “no”, the better. Empty shelves would get the message across better than anything else.

      • But they don’t include those costs, silly. They make the producers pay them, don’t they now!

  4. Unfortunately customers only see the price of everything and the value of nothing. When you’re in a market where even large scale companies can’t produce meat at a profit something is wrong.

    Although the price of supermarket meat is going up hell of a lot at the moment so perhaps the price increase isn’t as bad as it seems at first glance – it’s the spin I’d put out to customers when comparing this years and last years prices.

    I don’t have any answers, I wish I did.
    The only suggestions I can think of are
    * find an even more exclusive niche – selling to rich city folk who are willing to pay a hefty premium for good quality meat.
    * form some type of co-op with other crofters to see if you can reduce costs in some way by increasing buying power.
    * move away from pigs to some different type of animal – some exotic species that you can sell at a premium.

    I hope that you do figure out some solution.

  5. So sorry the math isn´t working out. I´m sure you´ve considered all your options, but I know here in Spain suckling pig is very popular – is there a potential restaurant or other outlet for those?

    I´m also a regular reader and appreciate your sharing your experience with all of us.

    • We’ve not been able to find an abattoir that will slaughter pigs small and young enough to be used as suckling pigs. None of the ones near us will kill pigs of less than 40kg. And they won’t kill larger pigs either. Scotch Premier used to slaughter baconers and cull sows, but no longer. They won’t take pigs that are in excess of 100kg liveweight and prefer 80kg or less. It’s all to do with the the layout of their killing lines: they’re optimised for commercial pigs in a narrow range of weights. Killing pigs smaller or larger than that size means having extra lines with equipment suitable for different sizes. It’s not efficient to have those lines, so they don’t have them.

      It’s the same approach they’ve taken with smaller butchers: it’s not sufficiently profitable to deliver meat to them, so they’ve stopped. And it’s the same with private slaughter: it’s neither efficient nor sufficiently profitable to do small numbers of pigs for a multitude of small producers so they actively discourage us from using them.

  6. Perhaps I did point out the obvious. Sorry about that. Consumers won’t change their habits until something drastic happens, like bacteria-laced chicken. Personally, I can’t understand why anyone would buy chain-store chicken. Just the thoughts make me sick.

    There’s a big movement in Canada to eat more organically and buy local produce. Businesses that specialise in these food products are sprouting up and doing well. Perhaps the philosophy is different where you are.

    There’s always going to be people who buy the cheapest so they can spend money on nonsense stuff — they’re the same people who buy soda pop for their kids instead of milk and pure juices. However, there’s a large part of society who is realising you are what you eat, and they will buy even if the price is higher.

    Good luck with your pigs. My future hobby farm will include a pig or two because pork is my favourite meat. If I lived near you, I’d buy from you, but given the distance, I can’t afford the shipping.

  7. Take a gamble?

    Stick an ad in a London paper and sell your stone head pigs at £350 a box as at that price they must be good.

    Or add a “shop” to this blog

    • Or call the piglets mini-pigs and sell them for £700 a pop? Oh, wait, some people already do that.

    • I don’t think there is an answer i breed pigs on a much smaller scale(1 sow, 2 litters a year) and slaughter and butcher myself and i still just about break even. Locally grown pig feed is available and mixed with excess milk from my guernsey cow so input costs are lowest i can go. I sell pork for $2.50 Lb per side, i noticed a sign at a local farm selling for $1.49 Lb. The end is nigh for my pig rearing if i lose my current small customer base. PS anyone in Nova Scotia need any weaners or pork both available in 6 weeks time. Good luck Stoney.

      • If you can make do with improvised fencing, housing and feed/watering equipment, already have access to a trailer, and don’t need to worry about a wage, then fattening a couple of £60-70 birth-notified weaners does make financial sense and will come in at less than the cost of mid-range to premium supermarket pork. Where it gets difficult is when you’re the pig breeder trying to at least break even by producing weaners to the price most people demand: usually about half the cost of production and sometimes much less.

  8. And I don’t think I saw a land/real estate tax figure in your tally. That eats into your bottom line too. What the average “consumer” doesn’t know is just exactly what it takes to rear animals to a good slaughter weight: the time, the water, the feed, the shelter/housing of the animals, the attention to their health, etc. If more people had to rear their own, they would gain a whole new appreciation for what farmers do! Our modern culture isolates people from what it takes to CREATE sustenance! Everything comes in plastic wrap or a cardboard box inside plastic wrap or inside an impenetrable vacuum sealed pouch, etc. It would do people some good to go back and read some historical accounts of what bazaars and food stalls used to look & smell like, what food on-the-hoof used to sell for and what the purchaser was expected to know how to do (e.g. butcher) to prepare a carcass for use and long-term storage. Maybe I’m just being naive to expect people to comprehend food production, but with the amount of “food” consumption going these days, you’d think it would cross the public’s mind from time to time.

  9. I’ve just discovered your blog today. So apologies if I seem a bit naive, but I’ve met a few small pig farmers, rare breeds and I suppose like you. They all say the same as you, personally I don’t find £7.50 a kilo excessive, I’m not rich but I know its better to eat less but better. Some of the producers I’ve met have been very pro-active in their marketing, approaching chefs and specialist shops directly. They travelled a bit further afield and perhaps they were lucky, I don’t know. But don’t give up, the Berkshire is a special pig.

    • There are people who don’t feel that £7.50 per kilogram is excessive. And there are people who don’t find £60-70 (or more) for a 10-week-old, 30kg, birth-notified weaner excessive. However, people in both of those groups are a minority, and a shrinking minority at that.

      I’ve had more than a dozen queries about weaners or pork in the past week: two-thirds of the people enquiring were aggressive, demanding and even offensive. On yesterday was typical. A bloke phoned, asked if we had a litter now and when I responded “yes, but…” launched immediately into “I want two weaners from the current litter and I won’t pay more than £30 each”. I told him the facts about timing, waiting lists and price, which made him all the more trenchant and demanding: “I said, I WANT two from that litter for £30 each”.

      As far as people like that are concerned, they are the customer, the customer is king and my job is to give the customer what they want, when they want it and at the price they dictate. Or as some prefer to put it, “at the price the market has decided”.

      Or take some of our semi-regular customers. They can be nice enough people, listen to what I have to say, inspect the croft and the pigs, and then buy a couple of weaners while complaining about the price. They buy once or twice, then there’s a gap. When they come back, they tell me they hadn’t been in touch earlier as they’d found some cheap pigs or even ones that were “free to a good home”. However, their cheap pigs turned out to have dodgy paperwork, were infested with worms, mites or lice, had pneumonia, had aggressive temperaments, or were scared all the time. So, they tell me, they’ve come back to get some good pigs again. Excellent, you might think. They’ve learned their lesson. Well, except that they expect me to match the price of those cheap pigs!

      I’m often asked why I deal with potential customers like these. Simple. Our contact details are on the blog, with the Berkshire Pig Breeders Club, with the British Pig Association and elsewhere. Customers use those to get in touch and I respond. I do try to take people through the merits of the Berkshire, the reasons for choosing birth-notifed pigs to finish for pork and bacon, the reasons for supporting Britain’s rare breeds and small producers, and the reasons for the cost/price differences between small producers and vast industrial agri-business. A few listen and are still interested, a few listen and reject what I’m saying by proclaiming “you’re just jumping on the rare breeds bandwagon”, and the majority won’t listen at all.

      As for being “pro-active”, I don’t just sit on my butt and hope people will come to us. We’ve been at the Turriff Show, we’ve been featured in the local and national press, on radio and on TV, we’ve talked to restaurateurs, hotels, butchers and processors (as with other potential customers, almost all want premium pork at budget pork prices), and we’ve even been involved in art projects. I’m the Scottish rep for the Berkshire Pig Breeders Club and do a lot to promote the breed. I fly the flag for the British Pig Association up this way. I do my bit for the RBST up this way. I produce this blog with its strong emphasis on pigs, as well as crofting and self-sufficiency in general and promote it. I’m active in several small-holding and self-sufficiency forums, both locally and nationally. If that’s not “pro-active”, then I’d like to know what is.

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