Warnings almost a third could quit pig sector as losses expected to reach €160m

Pig sector losses as a result of below-cost prices are expected to reach €160m by March 2023.

Pig sector losses as a result of below-cost prices are expected to reach €160m by March 2023, Teagasc analysts have said, warning that up to 30% of Irish pig farmers are at risk of closure.

Over the 18-month period from September 2021 to March 2023, the analysts estimate an average 600-sow pig unit will incur losses of €663,000.

The second quarter of 2022 is expected to be the most difficult for the industry, with losses of €47.2m expected. It compares with losses of €23m from September to December 2021 and €39.6m in the first quarter of this year.

The situation is expected to ease later in 2022, with losses of €34m expected in quarter three and €13m forecast for the final three months of the year. A further €3.5m is expected to be lost in early 2023.

The sector was already struggling largely as a result of African swine fever, Brexit and Covid-19 before the recent input cost price surges following Russia’s invasion of Ukraine. However, this has now exacerbated the crisis.

Irish pig farmers have put forward proposals for a €100m emergency pig aid package they say is needed to save the sector.

The document drafted by the Irish Farmers Association, Meat Industry Ireland (MII), and Irish Grain and Feed Association (IGFA) was sent to Agriculture Minister Charlie McConalogue on Tuesday.

The document, which has been seen by the Irish Examiner, outlines a range of measures including the immediate establishment of a pig stability fund.

While we acknowledge this fund will require sizeable state support, the importance and economic value of the sector merits this intervention as, without it, the sector’s long-term future and its contribution to the economy is in real jeopardy.

The Irish pig sector supports over 8,000 jobs and generates around €1.7bn of output across primary and value-added sectors.

IFA president Tim Cullinan said: “The Irish pig sector is currently engulfed in possibly the worst crisis in its history.

“Teagasc estimates that pig farmers are losing on average around €56,000/month and rising and that 5% of pig farmers have already been forced into a decision to exit the sector, with a further 20 to 30% at serious risk.”

Mr Cullinan said the association welcomed the initial €7m direct financial support via the Pig Exceptional Payment Scheme to pig farmers, but much more help was needed.

“This is not in any way adequate to address the industry losses that Teagasc estimate will reach around €160m. In order to address the current grave difficulties facing the sector, IFA in conjunction with Meat Industry Ireland (MII) and the Irish Grain and Feed Association (IGFA) have jointly developed a proposal to establish a pig stability fund,” Mr Cullinan said.

“This fund, partly funded by a statutory levy on all finished pigs sold or exported, will help somewhat alleviate the massive financial pressure being felt on pig farms. It will also work in the medium-term to address the volatility impacting the sector.

“Detail on this proposal is attached for urgent consideration by you and your Department officials.”

Speaking to this newspaper, Kildare pig farmer Roy Gallie, who also chairs the IFA Pigs Committee, said: “It won’t stop at 30% if losses keep going as they are. It is simply unsustainable.

“We need an injection of money either from the EU or Government. It needs to happen as soon as it can.

“People are making decisions by the day of whether they are going to stay in pigs or stop serving.”

From his interactions with members, Mr Gallie estimated that as many as 10% of pig farmers had already stopped serving their herds.

“If you stop serving, you now have nine months to get out of your piggery. That nine months will be costly because at the end of it you will still have a debt. Getting out only covers the feed. What we are getting for the pigs only covers the pig and you’ve got all the other non-feed costs for the next nine months to cover as well.”

Measures called for

Farmers are primarily calling for the government to establish, without delay, a state-administered fund to provide an immediate cash injection to pig farmers to avoid the demise of the sector at primary and processing level.

This fund will be jointly funded by a state contribution along with a long-term fund sourced by way of a new statutory levy.

The levy would be compulsory on all farmers producing finished pigs within the sector and would be charged at 90 cents per pig (the equivalent of around 1 cent/kg) on all pigs slaughtered in the Republic or exported to the North. Based on the 2021 output, this would generate a revenue stream of around €3.6m/annum based on the expected output of approximately 4m pigs a year.

Based on a 14-year payback period, this constitutes a direct farmer contribution of around €50m.

They are calling for a commitment from the State to initially fund the farmer contribution of €50m along with an additional upfront funding from the State of €50m. The former will be repaid by the revenue from the newly-established statutory levy.