Record-high feed costs, a slump in pig prices and a stretched processing capacity have all acted to erode family farm margins to the point where the average pig is losing the farmer €35, according to the IFA.
The association’s pig committee has called on Minister for Agriculture Charlie McConalogue to make crisis funding available to pig farmers amidst an “unprecedented” financial crisis.
The committee has called for processors to operate processing lines on Saturdays to help allow for a higher throughput of pigs and alleviate the backlog of finished animals on farms.
It is understood by the committee that the poor availability of Department veterinary inspectors at weekends had been preventing processing plants from operating in this manner previously.
Some farmers have reported pigs going out of market specification after being held longer on farm in cases when factories have limited throughput and are unable to take finished animals.
A temporary suspension of slaughter levies and a promotion campaign for pigmeat in Ireland are also being sought by the IFA, which intends to meet with Bord Bia representatives and with Minister McConalogue “immediately”.
IFA pig committee chair and north Kildare pig farmer Roy Gallie said an injection of cash into the sector was now necessary as family pig farms are on track to lose €500,000 this year, should feed and factory prices stay the same.
“In another week or two, a pig will just pay for its feed. All other costs – electricity, veterinary, housing, transport and so on – will be just borne by the farmer. It is the feed prices that are killing us. When do you pull the plug?” he said.
Gallie said he believed the criteria under which crisis funding could be made had been met but acknowledged the difficulties in designing a scheme which would transferring funds directly to farmers.
Boom to bust
The pig committee chair said the crisis seen in the sector had been the product of “many snowballs forming into one giant snowball”.
He stated that the sector had been in a bubble which burst far quicker than pig farmers had expected.
“Prices began to rise when African swine fever (ASF) took off in China and production elsewhere began to drive on.
“Things were going quite nicely until the bubble burst at harvest last year. We saw a lower yield than was expected in the US and Canada that pushed feed prices up,” he said.
Monaghan pig farmer Frank Brady said he felt that banks had not made the best effort to utilise schemes made available to businesses through COVID-19 and Brexit loan schemes to help pig farmers through the crisis with credit.
“The cost of grain has risen a third year-on-year while the price of pigs is down 15-20%. Compared with two years ago, the price is down around 30%. It is the worst things have been for pig farmers since the Lovell and Christmas factory went on fire in 1998.
“We are in the eye of a storm and no one knows when it will end. The millers are doing their best, giving farmers credit where possible. The banks will not engage. They have taken the high moral ground with lending.
“It is time for the banks to engage with farmers to use the money made available through COVID-19 and Brexit funding. It is what this money has been set aside for,” Brady said.
Paul Tully has reported substantial and unsustainable increases in feed prices over the past few months. Staff absenteeism when isolating due to COVID-19 has also pushed the issue of labour shortages to his attention.“The short-lived high we had in pig prices about a year and a half ago fell a lot quicker than most people had expected. “Pig farmers have seen a 60c/kg swing in margins since last spring, about a 30c/kg drop coming from higher feed costs and a 30c/kg drop in lower pig prices. This would leave the average farmer €54 down on average per pig when compared to last year,” Tully said. “We are having difficulties getting pigs killed as well. Holding heavy pigs with inefficient feed usage is exacerbated by high feed costs. Then you have to worry about missing market specifications and facing penalties on prices.”
Bank of Ireland has predicted a recovery in pig prices and a return of “normalised” feed costs in the second half of the year.
The bank acknowledged the current issues facing the pig sector, adding that short-term financial supports may be necessary for farmers to weather the impact of rising feed and production costs are having on working capital.
“Our view remains that while there are present challenges to be faced, it is likely that the market will undertake a form of recovery in the second half of 2022,” said head of agriculture at Bank of Ireland Eoin Lowry.
In the longer-term, Bank of Ireland has said that it sees the pig sector “well positioned” to remain an efficient and productive player in the agri-food industry, noting “solid profitability” among many pig farmers in previous years.