If the current margins over feed cost continue for much longer, the Irish pig sector – the third largest agri sector in terms of output – will crumble within months, according to a farm-lobby group.
Chairman of the Irish Farmers’ Association’s Pig Committee, Tom Hogan, was commenting on the margins over feed which, he believes, is the best indicator of profitability or for the past 14 months’ loss of the sector.
Hogan explained: “Feed makes up the majority cost of producing a kilo of pigmeat, and this cost has the greatest influence on the input side of a pig producing farm.”
Continuing, the chairman of the Pig Committee said: “Coupled with the prevailing pig price that is paid in Ireland, this leaves a simple margin left over to cover all other variable and fixed costs such as, labour, bank repayments, insurance, and other professional services required to keep a modern-day pig unit in production.
Hogan outlined that the Teagasc pig development department, which provides both research and advice to pig farmers, track these costs of production and output prices.
“This was caused by the double whammy occurrence of the low pig price which averaged just 140c/kg in 2018 and the increase in feed price brought about by the spike in cereal grain prices around harvest 2018.”
Hogan stated that pig producers are “no strangers to price volatility” on both the pig price and feed sides, but added that “the perfect storm conditions of 2018 and the longevity of this price cost squeeze is killing pig farmers and has been for months now”.
The sector has always had to stand on its own two feet, or else sink. There is no basic payment to cover over the cracks and allow farmers to stay in production, unless the market delivers a return that is sustainable.
Hogan once again called on all pig processing factories to show their commitment to pig farmers and rise pig prices by 4c/kg this Friday.
“While 4c/kg will still leave the sector in a loss-making situation, it will at least show farmers the pain is being shared on all sides and there may be a future for the sector, when the markets will inevitably turn for the better.”
The average number of sows on a commercial pig unit in Ireland today stands at 760.
With Teagasc figures imposed on this average pig unit, each kilo of pigmeat lost 17c/kg last year with the end result an annual loss of over €280,000 on this average unit.
Concluding, Hogan warned: “Without an immediate price rise; factories will not have to wonder where did all the pigs go very soon.”