Jack Kennedy and Anne Finnegan this week detail the findings of an assessment carried out by PwC into the value of the pigmeat sector to the Irish economy.

It may be a small sector in terms of the number of pig producers but it is one that generates €1.5bn per annum in economic activity. In doing so, it supports over 8,000 largely rural jobs.

But as we have reported in recent weeks and again this week, it is a sector facing a very uncertain future due to the scale of the financial losses currently being incurred.

The PwC report indicates accumulated losses on the average pig farm to reach €500,000 this year. Some argue that this ignores the strong financial returns made in previous years. But Teagasc figures show the losses in 2022 will erode the combined profits made in 2019 and 2020.

Gauging future demand from China will be key

Getting a proper understanding of the future economic viability of the sector will be critical when formulating a proper response to this ongoing crisis. Having accounted for 36% of total Irish pigmeat exports, gauging future demand from China will be key in assessing the long-term viability of the sector at its current scale.

African swine fever

There is no doubt that African swine fever (ASF) has changed the domestic market in China. In 2013, we saw the Chinese buy Smithfield Foods in the US for $4.7bn. Smithfield boasts to be one of the only US meat companies with in-house genetic research teams to support the development of their unique pig breeding programmes.

In the wake of ASF, were these US genetics used to rebuild a much more prolific Chinese pig herd, bred to fully exploit western grain-based diets and has this, alongside the development of state-of-the-art production facilities, changed the productivity of the Chinese pig herd?

Is the transformation of a sector aligned to reinforcing the Chinese policy to protect food security and food prices and, if so, will we ever see a return to the same level of activity in the global pigment market?

Answering these questions is key to determining where the future lies for the Irish pigmeat sector.