Asking pig farmers to foot losses to the tune of €121 million will, ultimately, result in an unviable sector, according to Irish Farmers’ Association (IFA) National Pigs Committee chair, Roy Gallie.
This week, Minister for Agriculture, Food and the Marine, Charlie McConalogue announced a €7 million emergency package for the pig sector. It will be distributed through a flat-rate payment of up to €20,000 for commercial pig farmers slaughtering more than 200 animals, annually.
But, based on figures from Teagasc, this leaves a shortfall of €121 million in a sector that is set to lose €128 million over a 12-month period from September 2021 to August 2022.
Speaking to Agriland, the National Pigs Committee chair said, it depends on what kind of pig farmer you are as to whether the €7 million emergency package is of value.
But, citing the recent data from Teagasc relating to projected losses sustained by the sector over the 12-month period referred to above, Gallie said there is a significant shortfall that cannot be met by pig farmers alone.
“This scheme comes in with €7 million. So, that leaves us with a shortfall of €121 million. Those two figures speak for themselves as to the value it is to the industry,” Gallie said.
The sector sought and fought for government intervention and financial assistance and, while the emergency package announced by the minister is certainly welcome, it is “nowhere near good enough” in the long term, Gallie said.
Minister McConalogue described it as an “urgent, short-term response to assist producers that would be viable but for the extreme current circumstances”.
He said it would allow space for a more medium-term adjustment to market signals.
Gallie said “there is not even a chance of it [the package] being good enough”.
“But it is all that they can give us under state-aid rules at the moment,” he said.
So, it is back to the drawing board, in a sense, and looking for an alternative financial injection that the sector desperately needs – preferably, one that does not come from borrowings and loans from banks, Gallie said.
“We have to move into a different scenario and look at the different funding mechanisms that are there, and how we qualify for them – which we have been doing over the last few months because we saw this coming,” he said.
The Brexit Adjustment Reserve (BAR) is an option, he said.
In June 2021, it was announced that Ireland would receive €1 billion euro under this scheme, in recognition of it being the member state most impacted by Brexit.
The process involved in drawing down funds from the BAR is not a simple one, with “numerous criteria in place”, according to Gallie, but it is one they will be looking into.
Other financial mechanisms of support are available for the sector, such as the Brexit Impact Loan Scheme and the Covid-19 Credit Guarantee Scheme, both of which are financed by the Department of Agriculture, Food and the Marine in partnership with the Department of Enterprise, Trade and Employment.
These schemes have been highlighted as suitable and open for pig farmers to avail of, but Gallie is not in favour of pig farmers having to borrow their way out of this situation.
“If you go down the borrowing route it simply means that you are going to take longer to come out of survival mode,” he said.
At the end of the day, he said, it is simply not economically viable for pig farmers to take on board losses of €121 million.
“To strap that onto the pig industry does not leave a viable pig industry,” Gallie said.
“What we need is an injection of capital into the sector to allow us to survive. We are going to have to look at the different schemes that are available, and see how we can qualify for them, and the money has to be relative to the scale of the industry. Some pig farmers are losing €50,000 a month, it is just catastrophic.”
There are two bodies of thought around the current crisis, Gallie said: one is that the sector will collapse without significant financial intervention; and the other is that the market will resolve the situation.
“There is that body of opinion, that the market will always sort the situation, but the casualties that this will involve are the real concern,” he said.
“Individual farmers will find it very difficult to weather the storm without financial assistance of much greater than €20,000 because of the scale and severity of the situation,” he said.
But, he acknowledged that “all options must be looked at”.
In the interim, he advises all pig farmers to communicate honestly and openly with their banks.
“Go and talk to your bank immediately. It is really important for farmers to do a 12-month cashflow plan, every farmer should be doing this,” he said.