DIVERSIFICATION and vertical integration are two of the key ways Australia’s pork producers are riding out the largest annual decline and lowest ever pig prices in real terms ever.
While an over-supply of pigs, combined with skyrocketing feed costs, has meant most farms have operated below the cost of production for more than a year, the long term demand outlook appears to be providing reason to hang in there.
Farmers at this year’s Pan Pacific Pork Expo (PPPE), held this week in southern Queensland, spoke of the fact pork was building on its position as the world’s second most consumed meat - particularly in Australia - and was well suited to tick the boxes of emerging consumer demands like all natural.
PPPE committee chairman and South Australian producer Andrew Johnson said it was fair to say the Australian industry was at a crossroads and there was more restructuring to come as a result of the current oversupply situation.
However, the bigger picture was there was still room for demand growth in Australia and still on-farm efficiencies and technology advancements to be had, he said.
Further, the strong information sharing and collaborative nature of Australia’s pig production sector would provide solid foundations to emerge “stronger and better” from this downturn, he said.
The over-the-hooks pig price is on track to average just 278 cents per kilogram carcase weight this financial year, according to Australian Bureau of Agricultural and Resource Economics and Sciences forecasts.
That will represent a 20 per cent drop on last year’s already rock bottom returns.
Mr Johnson listed a number of reasons for that.
Productivity improvements on farm in recent years had been exceptional - to the tune of an additional pig per sow per year.
Those extra numbers had combined with extra weight and a little bit of expansion in the industry, Mr Johnson said.
There were also many factors to list as to why demand for pig meat would be relatively strong in both the short and long term.
They include income growth, consumer preference for value and versatility and emerging trends towards nutrition, natural, sustainable and ethically-raised livestock.
Like all players in the protein sector, the demand outlook was very bright, Mr Johnson said.
With Australia in dire need of general rain, the domestic conditions were well and truly adding to the grain price pain for pig farmers, Mr Johnson said.
“Feed represents 60pc of our costs of production and grain has gone up easily $100 a tonne in the last six months and in past 18 months more than doubled,” he said.
There will be some reduction in the industry but it was hoped few producers were lost to the industry, Mr Johnson said.
“The economic benefit the pig industry delivers to regions is paramount,” he said.
Indeed, an independent report released this year showed in a typical regional community, pig production made a contribution of $3406 per sow to the local economy, including 21.4 jobs per 1000 sows and those numbers go up significantly if there are processing facilities in the region.
“Even in this downturn, pork producers are employing people who are leaving cities because they can’t find work,” he said.
ABARES, meanwhile, has the pig price lifting slightly to 284c/kg next financial year and by 2023 to 288c/kg.
More than 700 delegates have turned out for the Expo, which is an all-time record for the event.
“That’s an outstanding result considering where the industry is at the moment but it is as it should be - people need to network and look ahead, to step off the farm and take an overview of the business and gather information about additional efficiencies they can drive in their own operations,” Mr Johnson said.
The Expo featured a cook-off between PorkStar chefs Colin Fassnidge and Manu Fieldel, and chefs from the Chinese Cuisine Association.
Asked about how pig farmers were handling extreme animal activism, Mr Johnson took the opportunity to call on all livestock industries to support each other on this battlefront.
“All our producers naturally care about their animals and welcome anybody to come onto farms and see what we do,” he said.
“But to have people come on farm in the middle of night illegally is unacceptable to anyone.
“We have to collaborate as livestock industries to address this challenge.
“Yes, we may compete on the grocery list but we have many common areas we can work together on.”