Farm Ireland
Independent.ie

Tuesday 6 December 2016

Unity crucial for pork industry to flourish

Jarlath O'Dwyer

Published 22/06/2010 | 05:00

Pork farmers in Ireland have had a horrendous time over the past two years. With returns remaining depressed for long periods, producers are angry that price stability has not been delivered by Irish processors.

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Following many years of serious investment in production units and operating standards, the majority of pork farmers in Ireland are highly geared. And in a business where margins are extremely tight, all options need to be considered in times of crisis.

With many members of the North South Pig Company under financial pressure and operating below break-even point, the company decided to examine the opportunity of developing strong working relationships with British factories.

There are major frustrations among pork farmers. A bleak outlook for their individual businesses meant that many felt there was no future for the sector. This resulted in some closing down their units.

Fortunately, the traditional system of selling directly to the local factory is no longer the only outlet open to producers. But is exporting a proportion of our live pigs the only way forward?

The price differential between what the English and Irish factories pay for pigs is substantial. This makes the option of exporting a very attractive proposition. One of the main reasons for the establishment of the North South group was to offer protection to all of its members and to support them in finding new ways to market pork in Ireland. However, it has become essential that this is also done abroad.

Pressure

At farm level, there is €500-700m invested, while at factory level there is just above €30m. The irony is that while the farmers bear all of the risk and the financial exposure, they are being brought to their knees by processors who do not have such high gearing.

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Pork farmers here are at a stage where they are under huge pressure from the banks and feed suppliers and they are not in a position to watch prices fluctuate for much longer.

Efficiency and fairness at processor level in England mean that savings are passed on to producers. And, at a time where many Irish producers are struggling to survive, it makes perfect sense to grab onto a lifeline like this.

Pork produced here is farmed to the standards required by British factories. A quarter of the Irish pork is classified as Category 1, which complies with the highest British standards. In contrast, much EU pork is classified as Category 4.

Threatened

Irish pork is on the brink of being declared Aujeszky's-free, which will also help, while a high proportion of Irish farms have been Tesco approved. Although Irish pork cannot be sold under the Red Tractor logo, there is still enough demand in Britain to provide a vital outlet for our farmers.

Importantly, the British industry is not threatened by Irish imports as it only accounts for a single-digit percentage of overall consumption. For British processors, importing live pigs from Ireland makes good sense. There are fewer disease risks associated with Irish live pigs than importing from Europe.

In the long run, what will need to happen in Ireland is that farmers and processors start to work together more closely. This will mean that processors must see farmers as their partners, with whom they build the pork industry.

If this does not happen then another option would be that the farmers develop their own slaughtering plant and start operating a fairer pricing system, with better long-term controls.

However, if strong partnerships were to exist between farmers and processors, the confidence would be there for further investment and an expansion of the national pig herd. This would also encourage more young farmers to stay in the business.

Ireland is seen as a quality food-producing island and there will always be outlets abroad, especially with the opening up of massive markets in China and Japan. There is a future in pork farming provided that the industry operates as a unified group. This could deliver increased investment and, most importantly, a better return on investment.

Irish Independent