Some pig farmers with electricity prices locked-in with their suppliers until 2023 have had their contracts cancelled, attendees at a Teagasc webinar on the pig income crisis were told this week.

The electricity suppliers had cancelled these contracts under force majeure clauses, it was said by Teagasc pig development officer Michael McKeon.

A force majeure clause is the term of a contract that allows the service provider to exit the contract, should unforeseen circumstances arise that prevent them from filling their obligations to supply under the terms previously agreed upon.

Cancellations

The outcome of the contract cancellations will be an immediate or near-immediate increase in electricity rates for the farmers affected, effectively worsening the income crisis that will see the average pig farmer losing €450,000 in the 12 months from September 2021 to September of this year.

“Another issue there with some of the energy suppliers was that there was contracts there for producers out into 2023, but, due to force majeure, some of these contracts have been cancelled,” said McKeon on the webinar.

“So people are immediately there on a higher rate, whereas we would have thought that would have come slowly in over the last 12 to 18 months,” he explained.

Stretched lines of credit

The credit extended to farmers by the feed industry has increased by over 20% from this time last year, as feed has continued to increase in cost, the figures quotes by McKeon suggest.

“Now, the increase in feed credit from the milling point of view has gone from about €58m up to €70m, so it in an increase of €12m,” he said.

Should feed prices increase in April, as has been predicted by Teagasc, the feed supply sector will be waiting on an additional €8.5m in cash to come from farmers to pay for feed.

Minister’s response awaited

Minister for Agriculture Charlie McConalogue has not announced a decision on whether or not his Department will deliver crisis supports to the pig sector through direct payments instruments to farmers.

The Minister had committed to providing clarity “in two weeks” of the IFA’s crisis meeting for the pig sector just over two weeks ago on 4 February.

“I am hopeful of bringing clarity to that in terms of the initial support in the next two weeks and I have committed to farmers today on that,” the Minister told the Irish Farmers Journal after that IFA meeting in early February.