Teagasc National Pig Conference 2010
19 & 20 October 2010
Speech by Professor Gerry Boyle
1. Current State of Sector
In recent months, pig prices have been declining and feed prices have risen very sharply. As a result Teagasc estimate that the Margin over Feed costs has been reduced to about 43c per kg dead weight at present for units using purchased compound feed. This is not a sufficient margin to cover non-feed costs and leave an adequate return on investment. Pig producers are struggling to cope with these reduced margins and especially given that the sector had not made a full recovery from the very substantial losses incurred in the period from August 2007 to June 2008 again due to extremely high feed prices. Unfortunately, the level of feed credit in the sector has not been reduced significantly since 2008. Given the overall difficulties in relation to credit availability Teagasc recognises the financial pressures that pig producers are under.
2. Food Harvest 2020
The targets set for the pig sector in Food Harvest 2020, launched earlier this year by the Minister for Agriculture, Fisheries and Food, is to increase pig meat output by 50%. This is to be achieved by increasing the breeding herd by 50,000 sows and by increasing sow productivity to an average of 24 pigs produced per sow per year. These targets are ambitious. Irish pig producers must be competitive in terms of the costs of production relative to other countries in the EU and especially with pig producers in pig meat exporting countries such as Denmark and Holland. In relation to production costs, feed costs are the single biggest item and feed costs in Ireland are significantly higher in Ireland than in other EU member states. This is the single biggest challenge facing the sector. One very important component in reducing production costs is increasing technical efficiency.
In 2008 Teagasc produced a strategy document for the sector setting out recommendations on improving competitiveness. Some progress has been made but much remains to be done in the implementation of these recommendations.
3. Review of Good Agricultural Practice Protection of Waters Regulations
Teagasc has always and continues to strongly recommend the use of pig manure as a valuable source of nitrogen (N) and phosphorus (P).
Recent research by Teagasc has shown that 50% of the nitrogen contained in pig slurry applied to spring crops can directly replace fertiliser nitrogen, thereby reducing fertiliser costs for the arable grower. This fertiliser replacement value is amongst the highest of all organic manures. The monetary value of the nutrient in pig slurry equates to €4.50 - €6.68 per m3 , depending on the price of equivalent chemical fertiliser.
Unlike chemical fertiliser, pig manure contains carbon and will contribute, albeit to a moderate extent, to the maintenance of soil organic matter, particularly on tillage soils.
The use of pig manure of course also has a low carbon footprint: the CO2 emissions associated with the manufacturing of mineral nitrogen fertiliser equates to approximately 3 kg CO2-eq per kg N, which exceeds the CO2 emissions associated with the use and transport of nitrogen contained in pig manure. Recent Teagasc research shows that the energy savings from use of pig manure instead of mineral fertiliser N can amount to the equivalent of 100 litres of diesel per ha when used locally, and break even at transport distances of between 50 to and 75 kilometres.
Under the existing “Nitrate regulations” the Transitional Arrangements in relation to the application of Phosphorus from pig and poultry manure and spent mushroom compost are due to end this year (2010). Teagasc recognises the economic importance of the current transition arrangements to the sector and the implications of a precipitous end to these arrangements for the future viability of the pig sector.
The pig sector is responsible for over 6% of gross agricultural output, or over €300 million which makes it the third most important sector of Irish agriculture after cattle and milk production. The economic impact of the pig farming sector relates not only to the pig output, but also to its upstream linkages to suppliers and downstream linkages to processors. For pigs domestically processed, each euro of pig production results in a further 2.95 euro of output in the processing sector giving a combined production and processing value of around a billion euro.
These processing and input businesses are located primarily in rural towns around the country and provide an important contribution to the rural economy. Overall the input, production and processing sectors account for 7,500 jobs. The sector is particularly important in areas such as Cavan, Cork and Longford. The Border region accounts for the largest share of the Irish pig herd (32%) while the South East, South West and Midlands region account for between 16% and 19% of the herd. Both Cavan and Cork each have 19% of the national sow herd. Thus in some regions, the sector is the driving force of economic activity.
While the pig industry is internationally competitive and operates without the supports available in other sectors, the sector has been challenged by low profitability in recent years. Teagasc data indicate that margin over feed has been at, or below 50 cent per kg deadweight in recent years, which is the minimum level calculated by Teagasc advisers to be required to cover non-feed costs.
Based on our involvement with pig farmers through the advisory service, Teagasc recognises that the current transitional arrangements have been vital for the industry since the introduction of the Nitrates Action Programme. Our research has indicated that ending the transitional arrangement now, and without any additional allowance for the application of phosphorus on grassland, would require a reduction of 33% in the amount of pig manure that can be applied on existing grassland farms. In other words, pig farmers would need access to an additional 50% of grassland. This would be very difficult to source close to most pig farms.
While tillage farms can utilize pig slurry effectively, much of the pig industry is located at considerable distance from tillage areas. Teagasc research has found that amongst its sample of 440 commercial pig farms within the PigSys database, the gross cost of transporting pig slurry from pig farms to the closest available tillage farm willing to accept slurry amounts to €13.4m which would be about 4.5% of national pig output. This additional cost is equivalent to €91 per sow or 5.4c per kg deadweight. This is a significant and indeed unsustainable cost and in addition, the average masks a very wide variation of costs.
Longford would experience the highest cost at €174 per sow or 10.3c per kg deadweight, while Cavan would experience a cost of 7.9c per kg. Therefore the cost of having to transport pig slurry to tillage areas would amount to over 10% on average of non-feed costs, as high as 21.5% in Longford and 16.6% in Cavan, and 7-9% in South Tipperary and Cork, assuming an average margin of 48c. These additional costs would seriously threaten the viability of pig farming in some regions.
4. Welfare Regulations
From January 1st 2013 pig producers will be required to comply with additional pig welfare regulations as set down in SI 380 of 2010. In relation to the housing of pregnant sows and gilts, the Teagasc pig service quantified that about 50,000 sows would have to be changed to loose housing by then at an estimated cost of €32.5m. It was on foot of these calculations that the Minister for Agriculture, Fisheries and Food announced a package of grant aid for producers amounting to €13m. This has to be seen as a vote of confidence in the sector and a clear recognition of its important role in the agricultural economy.
5. Role of Teagasc
Teagasc have provided and will continue to provide a comprehensive programme of advice to pig producers and their customer farmers promoting the efficient utilisation of pig manure as a fertiliser for grassland and crops while comply with environmental legislation.
Teagasc is a science-based organisation. The role of Teagasc is to use science to boost productivity and thereby profitability in the agriculture and food sectors – our byword is “profit from productivity”. The role of the pig service in Teagasc is to use science to boost technical efficiency and thereby profitability in the pig sector. The pig service comprises a closely integrated team of development officers and support staff focused on the implementation of the pig programme for the department /unit.
- Research: Teagasc are currently considering the future pig research programme. Arising from this, decisions will be required in relation to the facilities and resources required to implement the programme taking account of budgetary constraints.
- Knowledge Transfer: There are now 325 commercial pig herds in the country consisting of about 400 production sites. The existing model for Knowledge Transfer includes farm visits, workshops, technical newsletters, conferences as well as phone and office consultations. The recent addition of the Fetac Level 6 Courses linked to Ballyhaise and Clonakilty Agricultural Colleges to the Pig KT programme has been very successful and Teagasc would like to see this continue with new courses starting next Autumn.
- The level of participation by producers in the PigSys recording and benchmarking system has improved this year but more producers are invited to participate; Benchmarking herd performance against realistic targets based on the results of other herds is fundamental to improving overall technical efficiency and profitability.
6. Partnership Funding
Teagasc understands that IFA are at present consulting members in relation to their views on their future requirements from a Teagasc pig service. Teagasc look forward to meeting with producer representatives to hear their views and suggestions/proposals in relation to pig research, advice and training.
At last year’s pig conference the contribution of the pig sector to the funding of the operation of the pig service was raised. In the intervening period the budgetary situation has become more difficult and this issue needs to be addressed immediately. Teagasc are not in receipt of any monies at present from the existing Pig Research Levy Fund.
Given the overall economic situation, it will be necessary to make changes in how the Teagasc Pig service will be funded in future in order to avoid a reduction in the service provided. We face real challenges in relation to the staffing of the service and to the level of facilities. We would like to build a new “state of the art facility” at Moorepark that will provide leadership for the industry. We estimate that such a structure will cost close to €2 million. We will need the wholehearted support of the industry if we are to realize this project in the current very difficult circumstances for the industry and the public finances.