Navigating the peaks and troughs of Irish pig production

Pig prices right now are in one of their all-too-regular troughs, Michael says: “Markets are very poor at the minute. If you’re selling at a flat price, you’re talking around €1.68 per kilogramme (kg). And if you’re grading well, you’re talking about a range between €1.68/kg to €1.72/kg. That’s way behind a breakeven point. Feed costs at the minute are getting worse with rising grain prices. At around the start of October, feed cost was €1.25/kg. Then you put 45c to 55c of additional costs on top of that, depending on bank repayments, energy, labour and everything else. It’s different cost factors for different farmers, but the bottom line for everyone is that pig producers are losing money at the minute. Teagasc calculates that, with repayments and everything, breakeven is around €1.85/kg. Increased energy prices, be it electricity, diesel, haulage, are a huge burden on production costs.”

Price prospects

Asked about an immediate improvement in pig production margins, Michael says he doesn’t see it: “We’re in that trough, with no upside at the moment because there’s an awful lot of bacon on the European market, mainly coming from Spain. For as long as this is the case, Europe is more than self-sufficient in pork. The sow herd has fallen in Europe as we speak but not by enough to bring us into a positive situation. The Chinese have restructured and expanded their pig production model. They are not buying as much pork as they used to and that’s adding to a global surplus looking for viable outlets.” Michael continues: “Irish consumer loyalty is strong and our DNA traceability scheme shows strong consumer, processor and retailer support for Irish product. The home market is keeping us in business right now.” 

Preventing disease

Over the past few years, disease has impacted global pig production and with the EU insisting on even higher production standards, these present a real financial burden for farmers. Michael reflects on the situation: “We take a very preventative approach in Ireland as far as possible, with vaccines playing a big role. The recent budget did support vaccines, especially for respiratory illnesses; they don’t cover every disease, but they are a big help in keeping the Irish herd healthy.”
“There are an awful lot of new regulations in the pipeline, but let’s be honest, with the way things are at the minute, producers can’t afford to implement them. Loose farrowing is being talked about now. It’s going to come in, but it’s not going to come in straight away because, unless there’s massive help, producers can’t afford to implement it. Higher production requirements are a challenge and over the years, all this regulation and this price volatility has delivered the Irish industry to where it is now with just a couple of hundred producers at most. In addition, price volatility is more acute than it ever was. That’s a problem going forward as well, especially in attracting new people into the sector. Your peaks and your troughs are happening quicker and your troughs are definitely a lot worse than they used to be.”

Labour management

Like all agricultural production sectors, labour availability is a challenge across the pigs sector, Michael says: “I won’t say that it’s harder than ever, but it’s a problem and you have to manage it. Without foreign workers we would have a big problem. With workers from abroad, we need to ensure their language skills are adequate so that everyone understands what’s going on, and how to follow instructions and engage with each other and with management. Teagasc has been very supportive and active in providing training and advice. It has launched a new programme recently to support the sector. It is doing its bit.” 

High efficiency levels

Michael points to the high efficiency standards of Irish producers: “We are well up there in terms of production efficiency. You hear of massive figures coming out of Denmark but they have their problems as well. I would definitely say our industry is on a par with anyone.
“And in terms of trying to squeeze more out of the enterprise, there are producers trying to develop biomethane units to add value. There are a couple of biomethane plants using some pig slurry. We’ve looked at different models, in Northern Ireland, for instance, and we’re looking at the viability of slurry separation and how that could add value. Teagasc is also putting a programme together to look at slurry and the way it can be managed.”

Future for Irish pig production

Asked about the direction of Irish pig production in the years ahead, Michael says: “I’d say there will be further rationalisation in the sector. The degree depends on individual circumstances. Whether producers have someone willing to take on the enterprise, for instance, is an issue. There are young people coming into the industry and thankfully it’s a priority in the IFA at all levels.
“We have interaction across all the production sectors on the issue of refreshing the farming workforce. The IFA pig committee membership itself has one of the youngest age profiles across all the national committees, so that’s a positive indicator for us. In fairness, when you see the amount of money we’re losing at the minute, it’s very hard for a young person to want to take it on. On the other hand, on that point of getting through the troughs, there’s always been an understanding between the finance houses and pig producers that you’ll have those times when you can’t make repayments, that it’s almost inevitable. I haven’t had anyone come to me with issues with the banks. I think there would be a genuine relationship there, and understanding around the volatile nature of the pig production sector.”