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Analysts believe that this trend is set to continue with forecasts of falling domestic consumption and a possible relaxation of quarantine standards which could bring in even cheaper imports and rob Australian pork of its disease-free reputation.

Pork slaughters fell for the ninth month in a row in February and production was down 10% on the same period last year, according to figures released by the Australian Bureau of Statistics .

Australian Pork (APL) media manager John Lamont attributed the falling production rate to smaller operators abandoning the industry. These players were unable to absorb the effects of the drought and resulting higher feed costs, compounded by the higher exchange rate, he said.

Apart from making Australian pork less competitive in key export markets of Singapore and Japan, the strong dollar has led to lower prices at home as farmers try to hold their own against cheaper imports.

Pig imports grew by an average 17% a year over the past three years , according to the Australian Bureau of Agricultural and Resource Economics (Abare).

The price per kilogram of pork adjusted for inflation has dropped from $10.65 in 2001-02 to $10.19 this financial year, ABARE says. The price is predicted to fall by close to 2 per cent next year and then to remain fairly steady until 2008-09 .

Abare's latest commodities outlook also forecasts a drop in domestic consumption after a small increase this year as beef, poultry and lamb get cheaper and more competitive.

The recent hard times have atrophied growth in the sector worth $1 billion at the farm gate which until 2002 was growing faster than the beef industry. Between 1999 and 2002 pork exports grew by 68.2%, compared to growth in beef exports of 37.8%. But pork exports have fallen drastically in the year to December, dropping 24.5% compared to a dip in beef exports of around 8%.

APL chief executive John Cook laid some of the blame at the feet of subsidised overseas competitors when he spoke at Abare's Outlook 2004 conference earlier this month.

Source: eFeedLink - 5th April 2004