Greater co-operation needed in pig industry

By Eric Donald

THE high level of distrust between pig producers, and processors is hampering the industry's ability to focus on core issues such as competitiveness, supply consistency, quality and traceability.

This is one of the conclusions contained in a strategic study of the pig industry in Ireland.

It looks at the industry, both north and south, and concludes that producers along with both primary and secondary processors will need to enter into co-operative agreements or supply chain alliances in the future.

It warns that the days of unplanned fluctuating arrangements regarding production supply to processors are numbered, due to increased competition from major international players.

The fact that half of the processing sector is controlled by co-ops is highlighted and the study recommends that this existing structure should be exploited to achieve greater collaboration between producers and processors.

Contracts between producers and processors are becoming the norm in some countries with whom we compete.

For example in Holland and the US, contracts and supply arrangements now account for up to 80 per cent of the supply of pigs in these two countries.

Excess slaughtering capacity

The report concludes that there is excess slaughtering capacity on the island of Ireland. There is the potential to kill 125,000 pigs a week, but the average weekly kill is just 92,000 head.

This unused capacity is affecting the competitiveness of the industry particularly on international markets.

The pig herd is set to decline in the years ahead and this will exacerbate the over capacity problem in the slaughtering sector.

The study warns that failure to implement an industry wide rationalisation scheme could eventually lead to a reduction in export markets. This rationalisation programme should seek to increase the scale of the remaining slaughtering plants and bring them closer to a figure of 20,000 pigs a week.

The processing sector in the south has not kept pace with the developments in other countries in terms of increased scale, processing efficiency and supply chain arrangements.

Pig numbers set to drop

The pig herd in Northern Ireland has been slashed in the last three years and further reductions are anticipated.

Taking an optimistic outlook this strategic study predicts that the breeding sow herd in the north could reduce by 10 per cent to 39,500 between 1999 and 2003.

They warn that the current structure of pig farming in the north cannot survive in the long term. It says that even for the most efficient producers, their profitability is constrained by factors entirely outside their control.

Pig numbers in the Republic are also expected to decline. The most optimistic outlook is that the breeding herd could fall to 178,500 by 2004.

Production in the south is becoming increasingly concentrated in certain counties, with over half of the pigs produced in four counties (Cavan, Cork, Tipperary and Waterford). This increase in numbers in certain areas could have environmental implications.

The drop in numbers is having a bigger impact on the throughput of the larger plants than the medium sized ones. The average weekly kill of the top five plants in the south is down by 10 per cent in 2000, while the medium sized slaughterers are showing an increase. Their weekly kill is up by 21 per cent.

The two biggest players in the processing sector on the island are Glanbia and Malton, and between them they account for 43 per cent of the total kill.

There is some concern that if the Malton or Glanbia capacity were to be taken out of the industry, then producers would have a problem getting their pigs killed.

In the south, Glanbia, Galtee and Dawn together killed 68 per cent of the total number of pigs slaughtered in 1999. Greenvale, McCarrens, Macmine, Ballon, Bergin and Dromone Meats collectively killed 18 per cent of the national pig kill.

In the North Malton, William Grants, Stevenson's and Crewe accounted for 99.8 per cent of the total pig slaughterings.

Increased imports

There has been a significant increase in the imports of pigmeat into the republic during the nineties. Demand for these imports is coming primarily from the secondary pigmeat processors and from the catering trade.

The study concludes that the catering sector is largely unaware that the product they are using is imported while the secondary processors are opting for imports, because they can get more consistent and reliable supplies which are cheaper.

Across the EU consumption of pigmeat is expected to stay fairly static over the next three years. Currently pigmeat accounts for 49 per cent of all meat consumed.

Meanwhile, world production is expected to increase over this period. Most of the increase is expected in China and the Far East rather than in the EU.