Australian Pork Industry Overview, September 2003
By USDA, FAS - This article provides the pork industry data from the USDA FAS Livestock and Products Annual 2003 report for Australia. A link to the full report is also provided. The full report include all the tabular data which we have omitted from this article.Australia
Situation and Outlook
Drought conditions that affected much of the Australian continent in 2002 and into the first
part of 2003 are breaking down, with precipitation returning to a much more normal pattern.
Fodder availability for range fed livestock has improved markedly in recent months; however,
fodder reserves and feed prices have yet to return to more normal levels. Even with a
complete return to more normal weather conditions, the drought’s impacts will continue to
linger for the next couple of years.
The drought forced many producers to sell animals, some of which were already stressed,
due to a lack of feed and water. The surge in the number of animals being marketed led to a
general fall in animal prices and reduced cattle inventory. With the improving weather, cattle
inventories are estimated to have bottomed-out and are expected to begin rising through the
remainder of 2003 and into 2004, as producers seek to rebuild their herds. This would
resume the up trend in cattle numbers that began in the mid 1980’s.
High feed grain prices brought on by the drought also reduced the profitability of Australia’s
cattle feedlot and swine sectors and trimmed inventories of cattle on feed and pigs. Lower
feed grain prices of late are providing some relief to these intensive livestock feeders whose
cost structure is heavily influenced by grain prices.
Australia’s pork industry was also negatively impacted by the drought, as rising feed costs
sharply reduced industry profitability. Pork production dropped in 2002 and is expected to
fall in 2003 before rising in 2004. Pork exports and imports both remain at near-record
levels. Australia’s exports of pork, principally to Singapore and Japan, have risen steeply in
recent years. Pork imports are also up sharply, with Canada and Denmark the leading
suppliers. A preliminary quarantine import risk analysis released in August 2003 indicates
that the United States may gain some access to Australia for pork.
The Australian dollar has risen sharply against the U.S. dollar since reaching a low point in
early 2001. This reverses a trend of the Australian currency falling in value against the U.S.
dollar throughout most of the 1990’s and into 2000. The longer-term decline in the
Australian dollar was a major contributor to the strong growth in Australia’s livestock and
product exports in recent years. The recent strengthening of the Australian dollar has
negatively affected the profitability of the very export oriented livestock sector. In August
2003, the Australian dollar averaged about US$0.66.
Swine
The Australian pork industry has undergone considerable consolidation. Nationally, there are currently about 2,500 pork producers, which is down sharply from the 50,000 that were in business in 1960. The industry is also now characterized by a relatively small number of very large operators, with approximately 80 percent of all pork production accounted for by about 20 percent of producers.
Production
Inventory: Australia’s swine inventory at the start of 2003 is estimated at 2.46 million
head, four percent lower than the level of a year earlier, and down significantly since Post’s
last report (see Report #AS3004). A sharp fall in feed grain availability brought on by the
drought and record high feed grain prices put downward pressure on pig numbers.
Opening inventory for 2004 is forecast to rise substantially to 2.95 million head, a number
much more representative of the longer-term average. A steady return to normal weather
conditions is anticipated to improve feed grain availability, lower feed grain prices, and help
boost inventory.
Post has revised the opening inventory number for 2002 downwards to 2.56 million head, in
line with official ABS figure.
The sow beginning stock number for 2003 is estimated at 335,000 head, six percent below
the year-earlier figure. The sow beginning inventory number for 2004 is forecast at 358,000
head, as producers are expected to benefit from more favorable weather conditions and
lower feed grain prices.
The beginning sow inventory for 2002 has been revised upwards to 356,000 head, and is
now in line with official ABS figures. This number is significantly higher than the industry’s
previous estimate of 314,000 head.
Production (Pig Crop): The pig crop number for 2003 is projected at 5.40 million head,
two percent lower than in 2002. The pig crop in 2004 is forecast to rise two percent, to 5.51
million head. A return to more normal weather conditions in 2004 is expected to allow the
industry to resume its longer-term incremental growth in inventory numbers. Post has
revised the estimated pig crop in 2002 upward slightly to 5.5 million head.
Official pig crop numbers are unavailable. The pig crop is generally derived using inventory
and slaughter figures.
Slaughter: Slaughter in 2003 is projected at 4.9 million head, 13 percent below the year earlier figure and in line with ABARE figures. The effects of the drought on animal husbandry
and the decline in the pig crop contributed to the reduced slaughter. Grain production is
currently forecast to rise substantially from the drought-reduced levels that characterized
2002/03. Many producers will be encouraged to withhold stock from slaughter in the second
half of 2003 in anticipation of improved feed grain supplies.
Slaughter in 2004 is forecast to increase to 5.25 million head driven by improved inventory
numbers, a higher pig crop and improved feed grain availability.
Slaughter in 2002 is estimated at 5.6 million head, unchanged from Post’s previous report
and the highest level in over a decade. Sharply lower grain production in 2002 and soaring grain prices forced many growers to slaughter stock that otherwise would have been retained.
Production (pig meat): Pig meat production in 2003 is projected at 361,000 MT, 11
percent lower than a year earlier and in line with current figures from ABARE. Production is
forecast rise steeply in 2004, driven by a larger inventory and higher slaughter rates. Lower
anticipated feed grain prices should also substantially increase slaughter weights in 2004.
Pig meat production in 2002 is estimated at 407,000 MT, the highest production level in over
a decade and in line with the official ABS production figure.
Consumption
Pork consumption in 2003 is projected at 382,000 MT, up slightly from 2002 and reflecting the upward trend in consumption of pork. Domestic consumption is forecast to rise to 395,000 MT in 2004.
Stocks
The Government of Australia does not have programs to encourage the accumulation of stocks of pig meat. Stock levels of pork in Australia are reflective of the commercial environment in which pig meat is produced.
Trade
Exports: Pork exports in 2003 are projected at 69,000 MT in carcass weight equivalents
(CWE), seven percent lower than a year earlier. Official ABS data have exports increasing
slightly for the first half of 2003. However, an anticipated increase in feed grain availability
and a subsequent fall in slaughter numbers should restrict full-year exports.
Pork exports in 2004 are forecast at 86,000 MT (CWE), a figure more representative of the
export level prior to the drought.
Official ABS statistics have pork exports in 2002 at 59,200 MT in shipped weight, or the
equivalent of 74,000 MT using a conversion factor of 1.25 to convert to CWE.
Australia’s pork exports have grown considerably in recent years, rising from less than A$71
million in 1998/99 (July/June) to almost A$250 million expected in 2002/03. Australia,
which typically shipped frozen pork to New Zealand, the EU and assorted Asian markets, has
now significantly expanded these exports, principally to markets in Japan, Korea and the
Philippines. In addition, Australia’s exports of fresh/chilled pork, which were less than 200
MT in the mid 1990’s, have risen to over 40,000 MT. Most of Australia’s fresh/chilled pork
exports are destined for Singapore and Japan.
Australia’s pork exports to Japan will be impacted by a Japanese “snapback” tariff on
imported pork that went into effect on August 1, 2003. A surge in Japanese imports caused
the snapback to be triggered, which pushed the Japanese import tariff on pork up from
546.53 yen to 681.08 yen per kilogram. The higher pork tariffs will run through the end of
March 2004. This is the third year in a row that the Japanese “snapback” tariff on pork has
been invoked.
Imports: Australia’s pork imports have also grown significantly in recent years. Pork
imports in 2001/2002 are estimated at about A$210 million. Given Australia’s stringent
quarantine regime, Canada, Denmark and New Zealand are the only countries permitted to
ship uncanned, uncooked pork into the country. Canada supplies about 60 percent of pork
imports by volume, Denmark supplies about 35 percent, and the remainder is supplied by
New Zealand or canned product.
Under Australia’s current quarantine policy, uncanned and uncooked pork meat can only be
imported from Canada, Denmark and the South Island of New Zealand. Pork from Canada
and Denmark must be imported deboned and the pork must be cooked on arrival in
Australia. In addition, pork can be cooked in Canada prior to export, whereas pork from
Denmark must be cooked upon arrival in Australia. Canned pork that has undergone heat
treatment may also be imported from any country.
Pork imports from the United States in 2004 are forecast at 10,000 MT. This figure
assumes the final import risk analysis for imported pork will be approved by the early part
of 2004 and that the level of access granted will be roughly comparable to that of Canada
and Denmark.
Policy
Draft Quarantine Changes for Pork Imports: In August 2003, Australia released new
proposed quarantine requirements for the importation of pork, which could provide access
to Australia for certain pork products from the United States. Final changes to the
quarantine requirements are pending a formal comment period; Biosecurity Australia will
accept comments through October 13, 2003, with a Final IRA Report taking into account
comments and any new information received. The Final Import Risk Analysis (IRA) Report
will be open to appeal for a period of 30 days after release. (See GAIN Report #AS3025
entitled Draft Quarantine Changes for Pork Imports for further information regarding the
Draft IRA.)
Proposed quarantine conditions outlined in the IRA would likely permit access into the
Australian market for certain U.S. pork products. Canada and Denmark already have access
to the Australian market for cooked pork, and together have captured a significant portion of
the domestic pork market.
Gaining access to the Australian market for pork has been a major objective for the U.S.
government and the U.S. pork industry. USDA’s Animal Plant Health Inspection Service and
the U.S. pork industry are currently studying the Draft IRA to ascertain potential issues and
market access that would be afforded to U.S. pork and pork products.
In March 2003, the European Union announced it had requested Australia to enter into WTO
formal consultations on its quarantine system for imports of agricultural products. In this
action, the EU specifically noted delays in outstanding requests for access to the Australian
market for fresh pork. (See GAIN Report #AS3011 entitled The EU Challenges Australia’s
Quarantine System for further information on the EU action.) The EU has now formally
requested that a WTO panel be formed to rule on their complaint.
Marketing
Australian Pork Limited and the Levy: Australian Pork Limited (APL) is the producerowned
not-for-profit provider to the pork industry. APL has a contract with the Federal
Government to allow it to receive and administer marketing and research levies collected by
the Commonwealth, along with Commonwealth-provided dollar-for-dollar matching funds for
certain research and development activities. APL is directly accountable to its levy paying
members for the programs it delivers and the money it spends.
Australian pork producers contribute about A$8.5 million for pork promotion and research
through a national Pig Slaughter Levy of A$1.65 per pig. The levy is payable on slaughter of
pigs for sale for human consumption and is payable by the producer. The producer is defined
as the owner of the pig at the time of slaughter. The levy commenced in 1971.
Proposed Pork Import Levy: The Australian Government has proposed that importers of
processed pork products contribute to a voluntary promotional levy to raise as much as an
additional A$1 million for marketing of pork on the domestic market. Industry sources
indicate that the Minister of Agriculture wrote to all pork importers to determine whether
they would be willing to pay a levy similar to that paid by Australian producers and, if not, for
proposals for an alternative approach. It is unclear whether importers would also be offered
representation on the board of APL. Further details of this proposal are unavailable.
Further Information
To read the full report please click here (PDF format)
List of Articles in this series
To view our complete list of Livestock and Products reports, please click hereSource: USDA, Foreign Agricultural Service - Annual Livestock and Products Report - September 2003