Ireland's pig industry: a sector in silent crisis

The number of pig farmers in Ireland has fallen dramatically in the last 50 years, a period over which it has become an extremely capital-intensive sector. In 1960, the pig census showed that there were an estimated 110,900 holdings with pigs. By 1980 this had fallen to 12,500 and in 2015 there were just 1,500 pig holdings in the republic. Pig farming is now a highly intensive operation compared with its previous position of being a farmyard enterprise.

By comparison, over the period 1984 to 2014 (30 years), the number of dairy farms reduced from 80,000 to 17,000.

Of the 1,500 pig holdings in the republic, there are an estimated 420 commercial herd numbers. However, many farmers would have numerous herd numbers and therefore there are in the region of 250 to 300 commercial farmers.

The cost of producing pigmeat can be broken into feed costs and non-feed costs. Feed currently constitutes 71% of the total cost of producing a pig, with the non-feed inputs contributing the remaining 29%. The primary source of volatility over the last three years has been due to the feed-cost element.

The head of Teagasc’s pig development unit in Moorepark, Ciaran Carroll, said that the breakeven point for pig farmers is 50c over feed. With the current average feed price of €1.10/kg of pigmeat, that means farmers would need €1.60/kg to cover costs. However, the weighted average price received in January 2016 was €1.35/kg.

“The 2015 margin over feed was 37c/kg, which is the lowest it has been since 1999,” said Carroll. “The feed prices stabilised over 18 months ago but they are probably back a little bit now. Barley, wheat and soya is back, so you would expect a €10/t to €15/t drop, but it depends on what the millers do.”

Given the higher price in July of €1.55/kg, Irish prices averaged out at €1.43/kg for the year, which was almost 3% above the EU average price.

Forecast for 2016

According to Bord Bia, there will be little change in output this year. Speaking at the Bord Bia meat prospects seminar in Kildare in January, pigmeat and poultry specialist Peter Duggan said there will be a decline in the breeding herd but that this will be offset by some further advancement in productivity.

“For 2016, Bord Bia estimates that pig throughput will stabilise at around 3.66m pigs,” said Duggan. “This is on the back of the breeding herd decreasing by almost 2% to 149,000 head in the June 2015 livestock census. However, it is expected that increases in productivity levels will offset this decline in the breeding herd.”

Challenges and opportunities

According to Duggan, the foremost opportunity for the industry is gaining more market access.

“Over the last 10 years our exports to international markets would have risen by almost 300%,” said Duggan. “Really it’s China that has driven that and we gained access to the Vietnam market in late 2014 so for 2015 we exported approximately 1,500t there. This would indicate that we could probably do more in this market. It takes a while to build exports to these destinations but it’s encouraging.”

In 2013, Ireland exported 20,000t to Russia and the sector here was “probably on track to do 2,000t a month in 2014 before we were banned by the end of January”.

Since then we have had to find alternative markets and have benefited from gaining access to countries in Asia.

“China are trying to become self-sufficient but I don’t think it’s possible with the size of their population and the pig herd that they have,” said Duggan. “They liquidated 10m sows out of their herd in the space of 18 months.

“Price is the number one challenge really. Some European countries are at above 30 pigs per sow whereas Ireland would be approaching 26 so we have a ways to go in terms of productivity.”

The challenges are “the reports published on an ad-hoc basis”, according to Duggan. A WHO report published in late 2015 said processed meat is a cause of cancer, which had an adverse effect on the image of some pigmeat products. Anti-microbial resistance and African swine fever are some of the other challenges that pig farmers face.

Labelling

A system of mandatory country-of-origin labelling rules exists for pre-packed fresh product since April 2015. However, the IFA’s national pigs committee said it fails to fully address labelling issues because it excludes processed products and loose meat. The IFA stance is that by extending the country of origin labelling to loose product as well as processed pigmeat, it would give considerable strength to the survival and sustainability of Ireland’s pig industry.

The IFA’s DNA-certified programme can test pigmeat that is being sold as Irish against a databank of boars used in Ireland. It has highlighted the issue of imported loose product being sold as Irish across retailers and the food service industry.

Support

The country’s pig farmers will share €1m as part of a €13.7m European Commission support package for the dairy and pig sectors. The Irish Government matched it with Exchequer funding and paid out €1,350 to every dairy farmer. Pig farmers had been calling for a payment. Each pig farmer who slaughtered at least 200 pigs in 2015 will receive a flat payment of €3,000 “shortly”, according to the Department.

TAMS

There have been 57 applications submitted for the first tranche of the €17.3m Pig and Poultry Investment Scheme under TAMS II. The Department has said that all applications are currently being processed and approvals will begin when the necessary checks are completed. The most popular investment items applied for include roof and wall insulation, energy-efficient lighting and water meters and medicine dispensers.

The IFA is making a submission to the Department to get the ceiling lifted from €80,000 to €300,000 because pig and poultry enterprises are more capital intensive than other farms applying to TAMS. This would help fund home milling units and new buildings to accommodate extra pigs due to the increased number of pigs per sow.

Processors

Like pig farmers, the processors in the sector are concentrated. According to the Competition and Consumer Protection Comission, formerly the Competition Authority, the market share for the processors are as follows:

Farmer focus Michael Monagle

Michael Monagle farms in Cork and Tipperary. With 2,100 sows between two farms, he finishes about 1,070 pigs per week. Although complimentary to the dairy farmer representatives for lobbying, he feels pig farmers got an unfair proportion of EU funding for the current crisis in the market.

“The farmgate value of pig produce is approximately 22% of combined dairy and pigmeat produce and yet we only received 3.65% of the fund,” said Monagle. “The amount of compensation having been agreed and distributed to pig farmers is abysmal to say the least.”

Monagle believes many farmers and their families feel abandoned and isolated such is the lack of representation and acknowledgement of their situation. “The reduction in pig farm holdings is staggering – a 99% dropout rate in four decades tells its own story,” he said. “Irish pig farmers are among the most efficient in the world, hugely committed and highly regulated, but factors outside their control, particularly more expensive feed, put us at a major disadvantage.”

Investment has been low in the industry for many years.

“The infrastructure on the average farm would cost in the region of €3m to replace today, not to mention another €500,000 for working capital. If support is not forthcoming with some urgency, farmers will crumble under financial pressure and without doubt this level of commitment will not be replaced,” he said.

In that regard, Monagle says it is time to bring in an external examiner to analyse the current state of the pig farming industry. “The other industry stakeholders and the public in particular will have to be convinced that they will have to pay more for end product if they want to save the industry. Even a modest increase of 5% on the shelf, if only half was paid back to farmers it would make all the difference.”

“The farmers, processors and retailers need to understand each other’s requirements and constraints,” said Monagle. “Appreciating each other’s business would hopefully develop a healthy respect between all parties and reassure a farming sector on its knees.”

John Paul Crowe has a small-scale farm in Dundrum, Co Tipperary, where he buys in fatteners at 30kg and finishes 10 pigs per week alongside a turkey-rearing and beef business. After dabbling in organic pig production, he exited that due to a lack of demand in the market.

“The demand wasn’t there for the whole of the pig,” said Crowe. “Nobody in Ireland wants the legs or shoulder and the export market was difficult too. Ireland doesn’t lend itself well to the dynamics of organics. You need dry, free-draining land for it because a pig will do more damage than a cow.”

However, Crowe is not tied to price fluctuations because his brothers have an abattoir and they set the price with their end consumers. Between them they have a farm shop, a website and they sell to restaurants and wholesale.

“In my game it’s easier to stay profitable,” said Crowe. “We might have a price review once a year but the set price works for everyone involved. It’s all about getting a market for the product. The end consumer generally doesn’t see fluctuations in price; it all happens in between. You have to be prepared when you are selling food into a volatile market.”

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