The pig sector, which is currently in a financial crisis, is expected to see an improvement in prices later this year, according to Bank of Ireland.
The financial institution said that it met with a number of key industry stakeholders and customers in recent weeks to understand the challenges facing the sector and outline the supports it can offer.
The Irish Farmers’ Association (IFA) has said that the latest drop in pig price of 4c/kg, and the rise in feed cost by €35/t, means every pig produced on Irish farms is losing over €35.
It estimated that a farmer with 500 sows is experiencing losses of €10,000/week.
Following its interactions with the industry, Bank of Ireland has issued a statement today (January 12) predicting a recovery in pig prices during the second half of 2022.
It noted that farmers were battling against spiraling feed and production costs.
“Despite many pig farmers enjoying solid profitability in the past number of years, the industry remains particularly exposed to global market conditions and price volatility.
“Over the longer term, the pig industry is well positioned, being a highly efficient and productive part of the agri-economy, but given the current cyclical challenges, financial supports are likely to be required in the short-term,” the bank said.
The institution said that farmers who are in financial difficulty should seek expert advice, adding that there are products available such as the Brexit Impact Loan Scheme that can provide “breathing room”, if needed.
The bank’s forecast reflects the predictions of Teagasc, which has said that the outlook for Irish pig price will be driven by two factors; Chinese demand and EU supply.
In the organisation’s December pig newsletter, it said that the sector “enjoyed a buoyant period of profitability in 2019 and 2020”.
However, Teagasc noted that lower pigmeat demand internationally and higher feed prices reduced profits last year.
In its outlook for 2022, the organisation gave a guarded forecast in terms of profit margins:
“It is expected that the effect of reduced EU supply and increased Chinese demand will be felt in the market from April onwards.
“Therefore the EU and Irish pig price should see a steady rise in Q2 2022 to reach a plateau by mid-summer, with a further moderate increase in Q3 and Q4.
“However, the substantial losses of the first half of the year will not be fully recovered by the modest profit margin in the second half,” the newsletter stated.