Australian pork industry reaches crisis point

Australia's pork industry is facing tough times on two fronts with prices hitting new lows and production costs skyrocketing
calendar icon 1 November 2018
clock icon 4 minute read

According to ABC Online, it's a crisis that has sent many growers to the wall. Those remaining are in survival mode, and most say it has never been tougher.

"This would be the toughest sort of period the industry has gone through and probably for 12 months now it has been a big hit on cash reserves," said Jock Charles of Berrybank Farm, near Ballarat in Victoria.

"We're now in a situation where we're looking at losses of around $100 per animal."

The family-run farm usually has a herd of 20,000, but like every one of Australia's pork producers it has put the brakes on production, stemming its normal breeding programme.

The piggery grows its own feed grain and in a normal year yields almost half the required tonnage, but this year, the tightening drought has slashed the winter crop total to its lowest in a decade.

Grain is scarce and exorbitantly costly, around $460 a tonne, for intensive animal industries such as piggeries.

"The pig prices put a lot of people under pressure but it's likely to be the drought that drives some people out of business," said Rob van Barneveld of SunPork, the nation's largest Australian-owned pork producer.

"We have some of the highest-priced grain in the world at the moment."

Feed constitutes 60 to 70 percent of production costs, and a tonne of crushed mixed grains and seeds currently costs $600.

A sudden downturn

According to the ABC report, Australia's pork industry enjoyed three buoyant years, but early last year production overtook consumption.

Too many pigs - a surplus of around six percent - has pulled prices down dramatically.

Most Australian-grown fresh pork goes to the domestic market and only 10 percent goes to export, so from powering forwards, the industry frantically hit reverse gear.

By the middle of this year, the worsening outlook for winter grain crops and high demand for drought fodder saw feed grain prices begin to surge.

Peak industry body Australian Pork Limited (APL) admitted some producers had exited the industry, but is yet to determine how many.

"We think that in the last perhaps six months we've lost about 10,000 sows' worth of production and that's of a total of about 285,000 [sows] that we started with," said Andrew Spencer, chief executive officer of APL.

In some ways, the pork industry has been a victim of its own success, as better genetics and animal husbandry delivered quicker growth rates and greater productivity.

But there has been some good news for the industry: Australians are eating more pork.

The average per capita consumption has climbed from eight to 12 kilograms in the past seven years and is still trending upwards.

Pork has now overtaken beef as the nation's second most eaten red meat but some producers are thankful not to be solely reliant on their pork businesses.

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