Financial margins for pig producers in NI are under pressure due to rising feed costs and falling prices for finished pigs.
“We are back 15-20p/kg in pig prices from this time last year, but we have a double storm because the price of feed has increased dramatically,” said Glenn Cuddy, chair of the UFU’s pork and bacon committee.
Although soya prices have eased since earlier in the year, the cost of typical rations on local pig units is still up by £70/t when compared to the same period in 2020.
“Imported barley is £250/t, whereas this time last year it was £180/t. Maize is also around £250/t, but it could be bought for £160/t last year,” Cuddy said.
It means pig farmers are getting squeezed from both ends of the profitability equation and there is little sign of any reprieve in the weeks ahead.
A key issue impacting pig price in NI is the shortage of workers in factories. The labour availability problem is worst in Britain where processing delays has led to a backlog of finished pigs on farms.
Discounted prices as low as 70p/kg are reportedly being paid for overweight pigs in Britain, which is less than half of current prices for in-spec pigs in NI.
However, most contracts for NI pig producers are linked to the Standard Pig Price (SPP), an index which is based on prices paid by factories in Britain.
“The prices that are being paid for out-of-spec pigs in Britain is being fed into the SPP, and unfortunately that is bringing prices down for us in NI,” Cuddy said.
While pork processors in NI are also short of labour, there is little evidence that it has had an impact on throughput in local factories.
The latest official figures from DAERA show that the total pig kill in NI this year to date is running 5% ahead of the same period in 2020 and is 10% higher than 2019 levels.
Pigs from the Republic of Ireland are also still coming north for slaughter, with DAERA figures indicating that imports have made up 22% of total throughput in NI factories this year to date.
Extra price cut
Another factor that could also impact on producer margins is a recent proposal from one local pork processor for a £13.50/pig price deduction to help address the labour shortfall.
It remains to be seen if the proposal will come to pass, especially given that the other main pork processor in NI has not come forward with a similar plan, but it has added to concerns among local producers.
“We are in an awkward place at the minute. They say they can’t get staff, but we can’t understand how they are able to keep killing so many pigs,” Cuddy said.