Following 18 months of poor pig prices it appears a massive rebound is occurring and, at present, pig farms have turned a corner in terms of profitability. A massive demand for pork on the international market has also emerged due to the outbreak of African swine fever (ASF) in Asia.
These were just some of the findings that were discussed at the launch of IFAC’s Irish Farm Report 2019 – authored by Philip O’Connor – in Co. Laois on Thursday, June 20. The report details the views of over 2,133 Irish farmers and contains a comprehensive analysis of 21,755 sets of farm accounts over four years.
O’Connor pointed out, on the day, that profitability in the pig sector was dependent on cost structuring and efficiencies. He also highlighted that feed costs amount to roughly 70% of the total cost of rearing a pig with the relationship between feed and price the key driver of profitability.
Source: Teagasc
“The accepted industry margin over feed (MoF) is 50c/kg to cover all costs plus financial commitments; however, looking back over the last eight years this target was only achieved in 2017,” he added.
“Teagasc data shows pig farmers made losses in three of the last four years; 2017 profits were not sufficient to offset losses carried forward from 2015 and 2016 and the substantial losses in 2018.”
O’Connor then pointed to ASF and its emergence in Asian countries over the past few months.
“There is a massive demand for pork on the international market and Irish pig farms are benefiting from the massive rise in pig prices,” the report’s author continued.
This coupled with a decrease in feed prices should leave pig farms in a profitable position during 2019.
“Pig farmers now have an opportunity to pay-down feed creditors and carry out necessary capital investment – the latter having been postponed due to poor pig prices and tight cash-flow.”