A rationalisation of excess slaughtering capacity in the pigmeat industry as production declines in the medium term, has been recommended by a new report.
The current level of of slaughtering per plant is falling significantly behind international best practice and the high level of dependence on commodity product - product which is not further processed - will limit the level of slaughterers' achievable profit margins. There is scope to improve efficiency levels and increase the level of further processing, it says.
The report does say, however, that the current geographic distribution of primary processing capacity is adequate and appropriate for the current distribution of production.
Imports of pigmeat into the Republic increased significantly during the 1990s, mainly carcasses and primal cuts which are further processed here. The main users of imported meat are the catering market and secondary processors who have problems with the unreliability and lack of consistency from Irish processors. Developing a strong export-oriented value-added sector within the industry is desirable from a strategic perspective but is very difficult to achieve. Developing such a sector has not been achieved in major exporting countries such as Denmark, Holland and the US, the report notes.
And it says that establishing a mechanism for stabilising pig prices can only evolve through supply agreements between producers and primary processors, which recognise the need for improved sharing of risks and rewards and international competitive reality.
The study was undertaken by the Department of Agriculture and Food and Enterprise Ireland in the Republic and the Department of Agriculture and Rural Development in Northern Ireland. Its aim was to quantify the adequacy of slaughtering capacity on the island and to measure it against best practice internationally, including benchmarks in Denmark, Holland and the US. It also analyses the capability of the industry to maximise returns through added value, branding, ingredients and on commodity products, examine import displacement opportunities and look at the possibility of smoothing out the volatility in the pig cycle.
There is an existing potential slaughter capacity to kill 125,000 pigs a week, although the average weekly kill is only around 92,000. The report says this excess capacity is affecting the competitiveness of the industry negatively on both domestic and export markets. Only the larger plants operate a full 36-hour week, while some of the smaller ones operate the slaughter line for as little as 15 hours a week. In competitor countries, 50-hour a week operations are becoming the norm.
The forecasted medium-term decline in pig production could range from 4 to 10 per cent in the Republic and from 10 to 30 per cent in Northern Ireland.
