December 4, 2006

Australian pork prices rise as drought worsens grain shortage

Drought in Australian is causing Australian pork prices to rise as Australia's hog farmers pay high grain prices to feed their hogs.

The Australian Pork Limited, an industry group, is currently working with hog farmers to determine the value of importing dried distillers grains and solubles (DDGS) to the pork industry and whether to apply for import permits.

Australia  has strict rules on quarantine of imported grains and levies high tariffs. However, more than 40 import permit applications has been received by the Federal Government so far.  Biosecurity Australia officers are making the first assessments of wheat, maize and sorghum from the US, Canada and the UK and expects the first import of feed grain for livestock to arrive in January 2007.

Quarantine rules also require that the imported grain be used either within the metropolitan area or denatured or processed at the port of entry before transportation into rural areas, the latter of which meant a prohibitively high cost.

The chicken meat industry, due to its location in metropolitan areas, is the only industry for which it is economically viable to use imported grain, the APL said.

Also, whenever import application seems imminent, domestic grain prices seem to reach a certain limit such that the idea is dropped again.

Singapore is one of the largest markets for Australian pork, accounting for 51 percent of total export volume in September, 2006. The country imported 2,159 tonnes of pork in September, worth some AUS$7 million (US$5.5 million). For the first nine months, of the year, Singapore imported 24,805 tonnes of Australian pork worth some AUS$87.3 million (US$68.7 million).

It is also one of the fastest growing, with on-year exports in September up 27 percent. Other markets like Thailand, Philippines, Malaysia and Japan also saw double digit increases.