High feed prices and low hog prices have led to a huge increase in sow slaughterings in Australia and there is a low level of confidence among producers, says production consultant John Riley.  Meanwhile, imports of pork products soar, including those from Canada, putting even more pressure on producers.

The winter edition of the Western Hog Farmer summarizes the Canadian industry’s response to high feed costs, the weakness of the US dollar and unsatisfactory market returns.

The dismal picture in Canada is mirrored in the Australian industry. In the last month, one of the largest production units in Queensland that is owned by a Japanese company has been put on the market.  If this 7,000 sow, farrow to finish business closes, there will be serious repercussions for the local feed mill and the two abattoirs in the state.

Another company to call it a day is the breeding company Hyfarm-JSR.  They have sold their 600-sow high health nucleus unit to a Dutch family who recently settled in the state. In addition, the Hyfarm-JSR multiplication unit is now on the market with limited expressions of interest by prospective purchasers.

Ironically, the Dutch family were encouraged to settle in Australia by a state government in 2002 which promoted the financial benefits of investing in the pig industry in Queensland.

The Productivity Commission report that handed down its findings in December, determined that the unprofitability of the Australian industry was not due to imports from the USA, Denmark and Canada, but was due to high feed costs.

In parts of New South Wales and Queensland, harvesting of the sorghum crop is well advanced with record yields being recorded.  Sorghum is a summer grain crop used in animal feeds.  Normally the price is around $AU160 per tonne but this year the price is holding firm at around $AU$260 per tonne due to the high demand worldwide for wheat and barley.  The usual seasonal reduction in average feed costs has not materialized so far in 2008.

During the last quarter of 2007, sow slaughtering was 49.5% higher than in the last quarter of 2006. The level of imports of processed pig meat during the 12 months ending December 2007 was 29% higher than in 2006 with imports from Canada totalling 43,415 tonnes shipped weight, an increase of 24.8% on the previous year.  In the same period imports from the United States increased by 52%.

The lack of confidence in the industry has resulted in very little investment in housing systems that comply with the new welfare codes. The codes dictate that within ten years, housing of sows in stalls for more than four weeks during gestation will not be allowed.

A few producers in the east that have moved to group housing in gestation have adapted grower pens and introduced feeding of small groups. 

In some instances in Western Australia sows have been housed in larger groups on deep litter in shelters and fed through traditional feeding stalls on a concrete pad in or adjacent to the shelter. The feeding stalls service more than one group of pigs on a rotation system.  The main disadvantage of the system is the high labour required in moving sows.

There is only limited interest in electronic feeding systems.  In the past Australia’s isolation in regard to after sales services has led to frustration and a few systems that were installed in the early 1990’s were subsequently removed.  However, interest has been rekindled in recent months and two large-scale producers have installed Mannebeck systems in naturally ventilated slatted floor sheds. 

In addition to high feed costs and poor market returns, producers in Queensland were shocked to read in March of their state government’s proposal to increase the cost of meeting the environmental legislation. The proposal, if implemented, will see a producer with 100 sows producing bacon pigs paying $52 per sow per year to government and a producer with 600 sows with progeny to bacon will pay about $9,800 per annum.  The State government has decided on a policy of full cost recovery from potential polluters of the environment for the implementation and the policing of the legislation.  Interestingly a local mining company selling gold worth $108 million will pay just $20,000 if the legislation is passed.

A further major change will dictate that multi-site operations will pay the fee on every site because multi site discounts will be withdrawn.  Pig producers in Queensland are far from happy and more could well exit the industry in the next six months.

Photo caption:

Group sows-1 – Producers in Australia are moving towards group sow housing