The story of Irish pig prices in 2018 started in late 2017 when the price dropped dramatically from over €1.60c/kg to a low price of €1.40c/kg by the end of January 2018.
This price slump was caused by an overproduction of pigmeat globally, with increased production from the US, the EU, Russia, and the largest importer of pigmeat in the world, China also increased its domestic production.
With reduced import demand from the likes of China, demand for pigmeat fell off and prices followed. Increased pigmeat production was brought about by both an increase in sow numbers globally in 2018, but increased efficiency and kilos of pigmeat produced per sow have been a contributing feature of pig farming in recent times.
Perfect storm for pig farmers
Combined with this drop in Irish pig prices to an average price in 2018 of just €1.41c/kg, feed prices increased steadily over the year.
In January 2018, a composite feed price, incorporating all pig feeds, lactating sow feed, dry sow, creep, link and fattener feed, was in the region of €290/t.
This price has increased steadily to leave the feed cost at over €320/t today.
When expressed as a cost per kilo of pigmeat produced, the cost of overall feed has increased from €1.05c/kg to in excess of €1.17c/kg with today’s feed prices.
This increase was brought about by a rise in the commodity ingredient prices of grains globally, but also through the increased demand from the ruminant sectors due to the very late wet spring, and then drought conditions that Ireland suffered from in 2018.
Margin over feed
The cost of feed, the main variable cost of production in the pig sector, and the factory price received, give the margin over feed figure.
Teagasc states that when all costs are accounted for, a margin-over-feed figure of 50c/kg is required in order to sustain a long-term profitable pig sector in Ireland.
Margin over feed was recorded as 33c/kg for 2018 by Teagasc.
This is a loss of 17c/kg on every kilo of pigmeat produced, or in more stark terms, a loss of €14.50 per pig sold.
This is clearly unsustainable going forward.
After months of losses, the financial crisis the pig sector is enduring has claimed some casualties with a number of pig units ceasing production and more pig farms on the market as going concerns.
While the pig sector is well used to price volatility, the margin over feed in 2018, that is down as low as 20c/kg today, is the worst yearly figure in over 20 years.
The market will undoubtedly turn, pig prices will rise, feed markets will stabilise, but pig farmers have to question the long-term sustainability of a sector that is highly efficient in terms of overall productivity and carbon emissions, that is not supported directly by the EU CAP budget.
African swine fever
African swine fever (ASF) is a highly contagious viral disease that results in high levels of mortality in pigs and herds.
It has the potential to completely ruin an affected region’s pig industry.
Reported incidents of ASF were first notified in late 2016 in eastern Europe, and into 2017 with Moldova, Czech Republic, Hungary and Romania affected.
It’s difficult to find any positivity in what has been a disastrous year
Reports of outbreaks emerged from China in August 2018 and many more confirmed and unconfirmed reports of the severity of the pandemic have hit the headlines.
Another European outbreak, this time in Belgium, has heightened all EU member states’ concerns and biosecurity measures have been increased to prevent the disease spreading throughout mainland Europe.
It’s difficult to find any positivity in what has been a disastrous year, but figures released by Bord Bia show that Irish pigmeat exports for 2018 were up 6% in volume on 2017 figures.
There has been major growth in Japan, Philippines, Australia and South Korea.
Bord Bia announced that a two-year €4m promotion campaign will be launched this year to promote both Irish beef and pigmeat to southeast Asian markets.
China’s ASF outbreaks will reduce domestic production in 2019, and demand for imported product will increase.
If Ireland maintains our AFS-free status, we are well positioned to benefit from this expected but often price sensitive increase in demand from China in 2019.
An increase in the Irish pig price above a breakeven figure in the region of €1.60c/kg is a long way off today, and this anticipated price rise may not come in time for some of our pig farmers.
* Acting executive secretary,
IFA pigs committee