To call a spade a spade, many farmers are sceptical as to the extent of the crisis in the pig sector. It is viewed as a cyclical business in which profit margins are volatile.

When the market is strong and profits are being made, the sector goes quiet. When prices collapse, as is currently the case, there are calls for help. In some ways it is a fair synopsis but the reality is that the same accusation could be levelled across most sectors of farming.

Yes, the profit margins achieved on some pig farms in certain years would dwarf the lifetime profitability of many beef and suckler farms. But these profit margins reflect the scale and capital intensity of the enterprise.

Similarly, when markets are challenging, it is the scale of the enterprise that sees these same farms amassing losses within a period of just a few weeks that would wipe out most livestock farms.

Energy and feed costs

The scale of the current losses is being amplified to record levels by depressed market prices and soaring energy and feed costs. The result is a 50c/kg loss on every kilogramme of pigmeat produced.

It makes for a stark calculation on the basis of each sow producing 2.5t pigment per annum: a loss of €1,250 per sow or €625,000 per annum on a piggery with 500 sows; and €1.25m or almost €3,500 per day on a piggery with 1,000 sows.

No business, irrespective of previous financial performance, can continue to operate in the face of such losses.

To its credit, the IFA pig committee has not come to Government empty-handed looking to offload the problem. Instead, it has taken control of the problem and brought forward, along with the industry, a proactive policy with a very clear ask.

The €100m rescue package being proposed is innovative: while initial funding will be provided by the State, pig producers will pay back €50m though a statutory levy.

It is easy to see how, politically, Minister for Agriculture Charlie McConalogue may run scared of what is being asked by what, at one level, appears to be a small group of relatively affluent farmers. But to do so is flawed on a number of fronts.

While the number of pig farmers is small at circa 300, the figure totally ignores the downstream and upstream jobs and economic activity generated by the sector.

Supporting jobs

Teagasc calculates that the sector supports a total of 8,300 jobs and generates €1bn in exports each year. For a minister to assess the need to provide support for any sector on the basis of the number of farmers directly involved would set a very dangerous precedent for other sectors.

When it comes to assessing whether or not the State should intervene in supporting a sector, farmers should be treated no differently to other businesses.

With COVID-19 supports, we saw businesses that recorded multimillion euro profits before, during and post-COVID-19 restrictions receiving millions of euro in State support to help them remain in business during lockdowns.

Therefore, historic levels of profit within the pig sector should in no way inhibit State funding going to support the survival of the sector during a period of extreme financial hardship – especially when there is a commitment to pay a percentage of it back.

Supporting pig farmers

As a farming community, we can stand back and accept the struggles facing the pig sector on the basis of previous financial performance. But as farmers we all know how exposed the profit margins within each sector are to influences outside the farm gate.

It is critical that when such factors affect any sector that the farming community stands in support and demands that Government action is both swift and appropriate.

The crisis exposes the dependency of the sector on export markets, particularly a very concentrated large market overseas where it is hard to differentiate product.

When that market collapses, the knock-on is immediate. The crisis also shows the vulnerability of a sector that has no competitive advantage, other than being ultra-efficient at farm level.

Other sectors of Irish agriculture can learn lessons from this crisis. A note should be taken as to the impact of any moves to try to reduce the competitiveness of Irish livestock farming, such as reducing feed grown on farm, which may lead to more purchased feed inputs and subsequent lower national stocking rates.

Financial assistance

What pig farmers have asked for from the minister is certainly not disproportionate to the financial challenges they face – albeit a commitment from farmers to increase the percentage of the fund to be paid back through a levy may help make the package more politically palatable.

But in whatever form, delivery of a financial package is critical to the very survival of many farmers within the sector.

When all the noise is stripped back, the decision facing the minister is quite simple: does he want to save the Irish pig sector or does the appetite exist in Government to simply let it fail?