The losses accumulated in the last two years will be recovered for a long time, says the executive director of pig farms
– What is the state of the pig breeding industry at the moment?
We are currently going through another difficult phase in the pig sector in Europe. We are witnessing skyrocketing costs and slowly rising pork prices. The increase in prices continued in August, but the price of pork returned to more normal levels compared to the cost price of our production. All of the increases in August set new price records. The losses accumulated in the last two years will be recouped for a long time.
The good news is that South Korea has agreed to negotiate the principle of regionalization of pork trade with countries where African swine fever is present. Such is, for example, Germany. What has been achieved is a great achievement of EU diplomacy, for now it is a first step, if only in words, because the negotiations are coming and if they follow through, it is expected that in January 2023, Germany and other African plague affected countries will start supplying pork for South Korea, and also for other Asian countries.
After the entry of African swine fever into Germany, the country was cut off from these eastern markets, where traditionally nearly 110 thousand pigs were sold per week, and in fact this number remained on the territory of the EU, and this led to the biggest drop in the prices of pork for decades in Europe.
Not long after, the economic crisis appeared, accompanied by the high inflation indices, which led to a high cost of our production. The scissors were wide open. Low purchase prices for pork, but high cost prices. All this led to the mass closure of pig farms in Germany, but also on the territory of other European countries, including Bulgaria.
Several large farms also closed down pending better times. This reduction in volumes has resulted in a shortage of fattened pigs and higher demand than supply. This shortage occurred not only in Germany, but countries such as the Netherlands and Denmark also reduced their volumes because of the whole situation. It remains to be seen how long the more normal prices for producers will hold and how long it will take to recover the losses.
Yes, we are enjoying slightly better pork prices, but unfortunately the cost price is rising in proportion to the purchase price, so it is still too early to say that pig farming in Europe is returning to normal levels.
During this period we are talking about, did the state do anything to stabilize the sector?
Since the beginning of the year, our associations have been in constant communication with the Ministry of Health, and we held several meetings in which we drew the attention of the managers that the sector is really going away. To our delight, additional funds have been allocated, which have not yet reached us, but have been budgeted for animal welfare, as well as additional aid to deal with the crisis situation. In practice, so far we have taken only one of the welfare tranches. In September we will see what will be the rest of the aid that was promised to us and on the basis of which a large part of the pig farming sector decided to continue working. Because more than 80% of pig farming in Bulgaria had decided to close. So, I would say that the state helped.
– What management decisions did you make during this time to keep the staff and production in the pig farms?
One of the main decisions was to reduce the volume of production. Our company raises over 13,000 sows and produces over 300,000 pigs per year, so we reduced the herd by 10-15% as early as the end of summer last year to be able to feed fewer animals as costs rose. and revenues were declining.
Other decisions we made were savings in terms of feed quality, electricity consumption, fuel, but all these savings also led to not so good commercial efficiency, and the reduction in volume accordingly leads to negative economic consequences.
We have stopped pelleting the feed as it also takes a lot of electricity and fuel. We stopped buying some more expensive raw materials. We were saving from all directions.
– Won’t these measures reduce the quality of the product you produce or the quantity?
Of course, all these economies lead to negative production consequences. When you economize, you lose quality. You lose from the volume you have, but in practice we were faced with two decisions. Either cut our loss or increase it.
– Are you thinking about completely closing the production cycle?
We are currently concentrating on being good at pig farming. Closing the production cycle always leads to better results. We produce our own feed, the pigs. We process part of them in our meat processing plant, we have a chain of stores. The only thing we lack is cereal production. Especially in pig farming, nearly 80% of the production cost is feed, and of the feed itself, nearly 80% of its cost is cereals. But farming is another business that is also not easy.
– Do you implement global innovations?
Pig farming is constantly developing. There are many new technologies that can be applied in business. Recently, there has been a lot of talk about so-called smart farms that can be controlled remotely. All production activities in terms of feeding, watering, ventilation, air conditioning, etc. can be tracked by special hardware and software that enables management to monitor the production results of the enterprise on a daily basis.
More and more technologies began to enter to raise pigs with even fewer people. These are quite modern boxes that can separate the different categories of pigs by themselves, and each pig is given special ear tags that contain a microchip that can monitor the condition of the pig. How much food he ate for the day. What’s his temperature? Another question is how ready each farm is for this step, because these are expensive pleasures and this technology costs money.
– What advice would you give to your colleagues? How to succeed in business?
There is no perfect formula. To be successful in business, you must have a well-knit team and well-trained people and specialists. For me, people and the team are extremely important. Also – perseverance in business, not to give up, because every production has problems. There are periods of progress. There are grace periods. Difficult periods demotivate everyone in the chain. It’s not bad to take risks. But to take moderate risks.