Darragh McCullough: 'Pig farmers are high on the hog as they take advantage of a once-in-a-generation boom'
I met a pig farmer in his new Maserati last week. It reminded me of the Lotto ad with the farmer heading home from the mart in the new Lamborghini.
With the global pork bubble almost doubling prices over the last two years, pig farmers everywhere find themselves on the proverbial pig's back.
At least for the ones that have survived this far. It is one of the few Irish farm sectors that has been mercilessly exposed to the full vagaries of the marketplace with little or no subsidies to cushion the impact of price booms and busts.
The roller-coaster of price swings in the sector has been so reliable over the last century that it is officially known as the pig cycle. It has nothing to do with breeding or, for those of you with more colourful imaginations, bikes.
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Instead, it's all to do with the economics of supply and demand. When there's a price hike, everybody piles in, builds sheds and keeps more stock.
Due to the time it takes for nature to complete a breeding cycle, there is a delay before all the extra output floods the market and collapses the price.
The predictable result is that the less committed operators give up and bail out or dial back production.
Then it's just a case of the remaining producers knuckling down to hold out until the next price rise.
The time lag is down to all those extra pregnancies working their way through the womb, farrowing houses, weaning, and fattening.
It used to be a cycle of about five years, but it's shortened in recent decades as pig farmers get info faster and faster. It's not just beef farmers that have learned the power of Whatsapp.
What's different about the latest upturn in prices is that it is so exaggerated - so much so it's now termed a 'super cycle'.
Prices have gone from €1.15/kg to over €2/kg due to one thing: African Swine Fever (ASF) in the Chinese pork herd.
The figures are staggering: China was home to 440 million pigs until 18 months ago. That accounted for well over half of the planet's pig population, and reflects China's love affair with pork.
But ASF has ravaged the Chinese herd to the point where over half of the pigs have now been culled in an effort to curtail the disease.
It has sparked a global rush for pork supplies that has doubled hog prices internationally, but also created massive spill-over into demand for other meats.
Chinese imports of beef and lamb have soared, creating price spikes in these commodities all over the world. The current estimate is that Chinese meat imports will jump by close to one million tonnes this year.
With 60pc of the average Chinese meat intake coming from the pig, and the rebuilding of the Chinese pig herd expected to take up to five years, industry experts are confident that this super cycle of exaggerated demand and inflated prices will prove to be a once-in-a-generation boom for the farmers that have been dogged enough to tough out the last few years of break-even margins.
It's estimated that there might be as few as 300 pig farmers left in Ireland. The biggest of them will operate several units, either developed by themselves or hoovered up from other farmers exiting the sector in recent decades.
The rate of consolidation in Ireland has been such that pig farmers here are now larger than the European average. There has also been a stunning 50pc increase in productivity over the last two decades with sows now routinely producing close to 30 pigs on the best farms. There are very few other farming systems out there that can claim to have made such strides in their biological efficiency.
These developments mean that many Irish units are sending upwards of 40,000 pigs annually to the factory.
This scale has a powerful multiplier effect. With prices up by €50 per pig, that's an additional €2m in the coffers for the most serious pig men left in the business. If that continues for a few years, they will have enough to retire and buy a fleet of Maseratis.
It's also a textbook example of how interdependent our world has become. And adds to the truism that it's an ill wind that brings no good.
The global commodity game is a cruel place the vast majority of the time. However, if you happen to be one of the last of the Mohicans in a particular sector when some unforeseen event strikes, congratulations. You've just won the lotto.
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