Rising costs and static prices piles the pressure on ‘struggling’ pig produers

Increases in feed costs witnessed this year – alongside static pig prices – have meant that Irish pig producers are currently under significant pressure, according to Teagasc pig development officer Emer McCrum.

McCrum explained that 2018 is lagging behind previous years and that traditional seasonal increases have not emerged at all in the year to date.

Quoting figures relating to May 2018, she outlined that the average pig price was about 140c/kg. Of this, 102c/kg is eaten up by feed costs – leaving a 38c/kg margin over feed.

Teagasc recommends that 50c/kg is the minimum level the margin over feed should fall to, in order for the enterprise to be viable. As well as this, pig producers can be expected to experience 59c/kg in relation to non-feed costs, McCrum added.

This would mean that both of these costs combined add up to 161c/kg – leaving a shortfall of 21c/kg for pig producers to deal with.

The pig development officer did highlight that Irish pig prices are not far off where the European average is – standing at 142c/kg; but the margin over feed across the EU equates to 53c/kg.

Feed costs have shown to be the biggest difference between the two. Average EU feed costs amount to 89c/kg – some 13c/kg below where they are in Ireland, McCrum stated.

Static pig prices ‘very disappointing’

Speaking to AgriLand, McCrum outlined how the prices received by Irish pig producers have remained very static over the past few months.

Pig prices generally follow a pattern; they can be lower for the first part of the year, but they normally increase when the weather improves – especially during the barbecue season.

“But we haven’t seen that trend this year so far,” she said.

Despite not enjoying the traditional price increases, pig producers have been forced to deal with increased feed costs in 2018, McCrum added.

She highlighted that, for every €10/t increase in relation to feed costs, the farmer must place an extra 4c/kg onto their cost of production.

‘Something has to change’

As it stands, pig producers are under significant pressure, according to the pig development officer.

Last year was a good year in terms of price. But, in truth, it followed a couple of tough years. 2018 has been very challenging so far.

“The costs are still there; the cycle is repeating every week,” she said.

McCrum is of the opinion that some pig producers won’t be able to continue operating at a loss for much longer, but admits it is difficult to put any sort of time frame on it.

“Will we lose some pig producers? Please god we won’t. But something has to change; no other business would be expected to continue operating at a loss for a prolonged period of time.

“Pig prices are determined by supply and demand; so in that sense they are beyond our control.

“But prices are down approximately 20c/kg on what producers were receiving this time last year,” she said.

20c/kg might not seem like a huge amount, but when you’re talking about carcasses of between 85kg and 90kg – it adds up quickly.

Concluding, McCrum stated that pig prices need to jump significantly and often – while also remaining at those levels for a sustained period – in order for the average pig price for 2018 to be considered a good year for producers.