March 20, 2009

The present world currency crisis and subsequent general fall in global exports has proved an unexpected bonus for Australian pig producers.

 

Fighting for years against ever rising costs and pork imports, better grain harvests have pushed feed grain prices down and fewer imports has reduced the supply of fresh pork and lifted domestic pork prices.

 

Australian Pork Limited (APL) chief executive officer Andrew Spencer said that pigs were fetching up to AU$0.40/kg compared with AU$0.220/kg to AU$0.23/kg at the bottom of the 2007 trough.

 

Spencer said farmers could now buy feed grain for less than AU$200 per tonne compared with earlier peaks of at least AU$350 per tonne.

 

He said that they are back to the stage where feed prices are around 55 percent to 60 percent of production costs instead of topping 70 percent.

 

He also added that pork exports had dropped by about 10 percent, and although the exchange rate had improved, there were not enough pigs available to supply the export market.

 

The bad news was that the industry exodus caused by the poor prospects for producers cut production by about 15 percent, from just over 400,000 tonnes to about 350,000 tonnes.

 

From September or October pig farmers began to make profits which were too late for many smaller operators.

 

APL expected pig prices to remain high relative to last year, until at least mid-2009 and this would partly depend on northern Australia producing an above average grain harvest to keep down feed grain prices.

 

In September, 2007, APL reported the pig industry was loosing an unsustainable AU$3 million per week, about AU$30 per pig sold, because of the drought and record imports.

 

Australia's largest pork producer, QAF Meat Industries of Corowa, New South Wales, general manager Paul Pattison said they are beginning to restock after the downturn when the company closed some sheds to do a general clean-up and upgrade of facilities.

 

Pattison that things are good at the moment things, but pork has to be competitive with other meats and unless there is a reasonable increase in present cattle prices, pork could price itself out of the market.

 

He said that if processed pork imports returned to their former growth levels, it would only take a 5 percent increase to compensate for the loss of domestic production.

 

He added that there were strong rumours in the industry that pressure is mounting on the Federal Government to allow imports of fresh pork.