AnalysisSouthern processing plants are struggling to survive in an increasingly competitive marketplace, writes Seán Mac Connell, Agriculture Correspondent

At one time in our history, Irish people were told when things were going well that they were "on the pig's back".

It is doubtful if that phrase would be used today in relation to the pig industry which has declined steadily over the last decade.

The day of every farm family keeping a sow and selling the fattened litter to the local factory is long over.

The processing industry itself is the largest producer of pigs for slaughter and it is believed there are fewer than 1,500 independent producers left in the State.

There are thought to be around 500 independent pig farmers left.

Even if Dairygold chief executive Mr Jerry Henchy had not announced his co-op's retreat from pig processing yesterday, it should have been obvious that the killing and boning operations were the weakest link remaining at the group.

The former Kerry group executive has already axed more than 1,000 jobs from the north Munster operation and he had signalled with the sale of the pig production units that the relationship with the pig was over.

Since the beginning of this decade there has been a 20 per cent fall in production at the three main pig processing plants in the State.

More than 80 per cent of the State's processing has been in the hands of Dairygold, Glanbia and the Waterford-based Dawn group.

These companies have also been major producers of pigs for their own operations.

But over the same period, there has been a steady stream of pigs going to Northern Ireland for processing, a stream which has turned into a torrent since the break between sterling and the euro.

In the year 2001, 70,000 pigs from the Republic went north to be slaughterd. By last year that figure had grown to 400,000 animals. Already this year, more than a quarter of a million pigs have gone to Northern Ireland for killing, where modern slaughtering facilities have come on stream.

Major processing facilities have been put in place by the Grampian company, which is regularly accused by producers in the Republic that they too are keeping prices being paid to farmers low.

Sterling's strength, the economy of scale in the North, and ready access to the lucrative UK markets have placed extreme pressures on the Republic's plants.

Mr Michael Barry of IBEC said another problem facing the industry here was the increased regulatory costs, which do not seem to apply in the North.

"Just one of these costs which was imposed recently here has been the Animal By-Products Regulation which was imposed in January and is costing €1.30 per pig," he said.

"Given that around three million pigs were slaughtered in the year, this means an additional €4 million in production costs facing the industry," he said.

Mr Barry said the movement of animals to the North has meant there has been increasing over-capacity in the industry in the Republic, which was also creating problems.

He said other European countries were operating at huge scales where they were processing as many pigs in a week as all the Republic's plants.

He called on the Government to work with the industry and producers to ensure its survival.

Last year was a very difficult year for Irish exporters who were selling into a market of falling prices.

However, according to Bord Bia figures, while the value of exports declined by 7 per cent during the year to €250 million, there had been some expectation of a recovery this year.

The UK continued to take most Irish exports last year, 55 per cent but we did sell 27 per cent of exports, or 32,000 tonnes, to continental markets.

Both Bord Bia and the Department of Agriculture and Food had predicted an improvement in world prices during this year which never fully materialised.

Producers had complained that they were receiving the same price for their pork as fifteen years ago while production costs had almost doubled.