Development strategy for North’s pig industry must be agreed quickly
The management of a leading pig development organisation has flagged up the absolute necessity for all relevant stakeholder groups within the North’s pig industry to agree a road map, which will lead to the development of a sustainable future for the sector.
Hugh McReynolds, CEO of PCM, Preferred Capital Management Ltd, has indicated that the Going for Growth strategy, published by the Agri Food Strategy Board last May, flags up the potential for an extra 15,000 sows to be placed on local farms in the run up to 2020.
He added: “We have ‘talked the talk’ but now we need to deliver – not just go around in circles and fail to commit to one another. I firmly believe that processors need to show leadership and break this cycle of inactivity, if they want to maintain or grow the business.
“Decisive moves by the processors will ‘goad’ the Industry to much needed action and deliver growth. The Food Strategy Board has not, and, cannot deliver this change alone.”
McReynolds continued: “The Commercial Banks and Invest Northern Ireland need to agree a funding model with the pig industry, which meets the needs and requirements of the present day situation. This is sadly lacking as we speak. There are some forward thinking pig farmers being held back by lack of access to finance and a commitment by processors.
“A vibrant pig production sector requires both the combination of new efficient high health breeding sites together with contract finishers and proper investment in our existing farms.
“Retailers will only support the pig farmer if we demonstrate our professionalism and production efficiency. The present market price gap between UK and EU pig prices is a huge challenge for processors selling into the retail market, The ‘horsegate’ situation leading to a demand advantage is now ‘so last year’ and holds little or no commitment now by retailers in their sourcing policy.
“If Northern Ireland’s pig industry is to survive and prosper, then we need all stakeholders to play their part to facilitate change and growth. I would particularly highlight planners, the environmental agency and especially the local council environmental health departments. We need these service suppliers to deal with planning applications in a time efficient and reasonable manner.”
The PCM representative went on to point out that processors need to commit to suppliers and enable them to invest wisely in a medium term plan to improve efficiency. In addition, farmers need to increase sow numbers to achieve a critical farm or operational size.
“The conflict can sometimes arise as the processor runs the business on a weekly profit and loss with capital expenditure decisions based on a three-year maximum payback,” McReynolds stressed.
“ The pig farmer has a longer timeframe in mind and will have struggled to achieve a seven-year payback. A 15-year financial plan would be more appropriate. In fact Denmark farmers pay back loans over 20 years, which is essentially a loan-type arrangement. Processors need to reflect a large element of the true cost of production in any contract.”
McReynolds concluded: “Pig farmers need to become efficient, and quickly. They need to be fully aware of their costs and fully understand what they can do to improve efficiency. The reduction of all elements of cost will ultimately lower the cost of production and hopefully improve margins.
“In essence, all sectors of Northern Ireland’s pig industry need to commit to achieve the vision in the Food Strategy Board initiative. This is easily said but hard to deliver in the present climate of uncertainty.”