The harsh reality facing pig farmers was highlighted this week at a Teagasc webinar for pig farmers. The webinar heard that unprecedented losses of €128 million could be experienced by pig producers – on an average 600-sow unit – over the period September 2021 to August 2022.
And, in the same period, the loss per farmer on such a unit is expected to be close to €450,000.
The finance-focussed webinar featured presentations from Teagasc pig experts, Gerard McCutcheon and Michael McKeon, who revealed sobering figures on current costs and losses experienced by farmers. It also offered financial reassurance to farmers with input from representatives of financial institutions.
Teagasc pig advisor, Gerard McCutcheon put some perspective on current feed costs and prices that farmers are being paid for their produce.
Margin over feed
From September 2021 onwards, feed costs have been “rising dramatically” up to the current €1.33/kg deadweight, he said.
At the same time, the net price being paid for pigs has dropped since then and is now €1.43/kg deadweight.
“So the margin over feed (MOF) – that is the amount of money left for the non-feed costs – is 10c/kg deadweight,” he said.
Not since 1999 has the MOF been as bad. Back then, it was 22c/kg deadweight.
To put that into some context, the overall trend over 24 years, since 1998, is an MOF of 46.7c/kg deadweight.
Time period Amount 1998-2002 45c 2003-2007 51c 2008-2012 44c 2013-2017 47c 2018-2021 49c Current 10c
“The MOF is critical,” McCutcheon said.
“And the current MOF is not sustainable, or viable, if it continues over a long period of time.”
Average unit
Putting context to the losses incurred by pig farmers, Teagasc pig development officer, Michael McKeown, said that an average 600-sow unit is losing €56,000/month, with an accumulative loss for January and February of €107,000.
And, due to the upward pressure on feed ingredients, it looks as though the composite feed price is going to increase in April, he said.
“The indications from the industry is that this is to go up by €30/t. This is going to make a very bad situation critical at that stage,” he said.
“From a cashflow point of view, for an average-size unit, it looks like a deficit for April will be nearly €64,000. And for the first four months of the year, that comes to €227,000.”
Feed ingredient prices are expected to fall back during the harvest time – but not by as much as they rose, he said – maybe by €40/t.
Despite this, and predicted improved pig prices, the losses are still unprecedented, he said.
“That is a loss of nearly €450,000 for an average sized unit, which is absolutely massive, this is a serious, serious loss for the sector.”
The producer loss alone, he said, is €109 million from January 2022 to the end of this year.
“And that is in a small sector with about 300 farmers.”
But peak loss happened last September, he said, when the feed ingredient prices started to rise. So from that point, until August 2022, there is a loss of €880/sow, which is a total loss of €128 million.
“The pig sector is a billion euro industry but, even still, a loss of €128 million is massive.”