Feed price increases will hit pig farmers’ bottom line immediately
The imminent hike in grain and compound feed prices will hit pig farmer margins almost immediately, according to Irish Farmers’ Association (IFA) Pigs Committee chairman Roy Gallie.
“Most Irish pig farmers are home mixers. Many had bought soya forward and had managed to insulate themselves from the increase in protein prices that hit the market a few weeks ago,” he said.
But any increase in grain prices now will have a direct impact on producer margins very quickly.
“Feed prices account for 70% of the total cost associated with pig production here in Ireland. Pig prices have been in decline since the spring of last year. So any increase in grain prices that comes into play over the coming weeks will act further to reduce the margin that farmers make on finished pigs.”
Gallie farms in north Kildare. He combines a 150 sow, birth-to-bacon operation with a grain growing enterprise.
“All the cereals grown on the farm are fed to the pigs. It’s a 50:50 wheat and barley production mix. I buy in additional grain to meet my needs, when required,” Gallie told AgriLand.
According to the IFA representative, 2020 was a reasonable year for Irish pig producers.
“Twelve months ago, finished pig prices were averaging €1.90/kg. These prices held for three months, at which time processers were finding it difficult to get containers back from China,” he added.
“Covid-19 then kicked in to further weaken the market for a number of reasons throughout the remainder of 2020.
Pig prices are currently in the region of €1.58. It’s projected that the market may weaken somewhat during the first half of 2021, after which they may start to strengthen again. But time will tell.
“Pigmeat and cereals are global commodities, and there is nothing that Irish pig farmers can do to influence these international markets,” Gallie concluded.
Meanwhile, Northern Ireland Grain Trade Association (NIGTA) chief executive Robin Irvine has confirmed that grain importers and feed manufacturers are facing a perfect storm with weather events and hedge fund activity combining to drive up global commodity prices.
“And now there is the additional impact of a 3-week long port strike in Argentina,” Irvine said.
Argentina is the major supplier of soyabean meal and soya hulls to the European market and its principal port, which normally handles around five million tonnes of grain and feed materials per month at this time of year, has been at a standstill from December 9.
“A strike by port workers brought an end to all crushing and loading activity and it is estimated that there is now a backlog of 160 vessels in the queue waiting for a berth and racking up millions of dollars in demurrage charges every day.
“It took government intervention to resolve the dispute and loading has resumed in the past week. The result is a break in the supply chain for soya products and it will take several weeks to fully catch up with the backlog,” Irvine concluded.