Australian pig producers have suffered the same problems as their Canadian counterparts, with low hog prices and high feed costs, says consultant John Riley.  But now, a weakening of the Aussie dollar and a downward trend in feed costs has resulted in optimism that the worst is over.  However, producers need a sustained period of profitability to regain confidence and invest in new technology, he believes.

The number of pigs slaughtered in Australia in June 2008 fell by around 14 % compared with the same period in 2007.  The pigs slaughtered totalled just 406,000, the lowest monthly number for well over a decade.  The low number of pigs forward has resulted in prices increasing to $2.80 per kilogram for a 75 kg carcass.  With an anticipated drop in the national sow breeding herd from 286,000 in June 2007 to approximately 250,000 in June 2008, the industry is hopeful that improved prices will continue through to early in 2009.

The record grain sorghum harvest in Queensland and NSW and promising planting conditions for wheat and barley in the southern states and Western Australia has resulted in feed costs easing downwards slightly.  With the northern hemisphere harvest well advanced, producers are hoping that the downward trend in feed prices will continue.  If the Australian industry is to avoid further contraction a significant period of profitable production is essential.

Over the last twelve months or so most businesses have increased their liabilities to remain in production and there is a real concern that, as the economic climate improves, financial institutions will put pressure on businesses to reduce their debt load resulting in more producers exiting the industry.

By Australian standards, 2008 has been a long cold winter.  On many units, pig accommodation is designed to meet high summer temperatures not low winter temperatures.  Most sheds are fitted with cooling systems but not heating systems and in the last quarter improvements in income in the market place and the marginal reduction in the price of feed have been eaten up by poorer feed conversion efficiency in the grower herd and increased pre-weaning piglet mortality.   

The fall in the value of the Australian dollar from 98 cents US earlier in the year to currently around 86 cents has had limited effect on the level of processed pig meat reaching Australia. The level of imports from both your country and Denmark have fallen significantly, imports from Canada have fallen by some 6% shipped weight.  The expected market opportunities for Australian pig meat have not materialised as the USA have increased their volume landed in Australia by nearly 8% year on year to over 31,000 tonnes shipped weight. The level of exports fell as the Australia dollar almost reached parity with the US dollar.  With the fall in the value of our dollar, industry is hoping that export volumes to both Singapore and Japan will increase. It will, however, be a slow process recapturing market share lost to our competitors.  

On the home front, the sale of the Hyfarm breeding company’s interests have been finalised and the breeding company in which UK-based JSR Health Bred were a major partner has exited the industry. At the same time as Hyfarm left the industry PIC Australia has purchased a 7,000 sow, farrow to finish unit from Nippon Meat Packers Australia Pty Ltd.  The Japanese company, which has a substantial interest in the beef feed lot industry, developed the state of the art piggery in 2000 to supply both the domestic and export market.  PIC Australia is owned by the CHM Alliance, whose members also have interests in the poultry industry and cotton production.  The acquisition of the Nippon unit at Tong Park in Queensland makes them one of the largest operators in Australia after the 40,000 sow QAF holdings in New South Wales and Victoria.

Australia, as an island, albeit a very large island, is very protective of its animal health status and applies stringent bio-security protocols.  There has been no importation of porcine genetic material since about 1990.  In the opinion of some experts the policy has resulted in a lack of heterosis in the national pig breeding herd.  The average number of pigs weaned per sow in a small sample of herds recorded with the industry’s pork organisation Australian Pork Ltd (APL) is 20.73.  On a visit to Holland in July, I had the opportunity to meet with a representative of the international breeding organisation Topigs and visit several of their client’s production units.  Arjan Neerhof, the Breeding Program Manager at Topigs, claimed (and his client’s production records confirmed) that commercial units using the Topigs 20 line were averaging 26.8 pigs weaned per sow per year with the top 10% achieving 29.8 pigs weaned compared with an average of 23.5 for the top 10% in the APL sample.

The Dutch industry is producing six more weaned pigs per sow per year than Australian producers with the same level of feed usage.  If Australia is to compete successfully on the world market, the experts referred to earlier argue that the importation of genetics is a high priority providing our stringent bio-security regulations can be met.

The Australian industry takes great pride in its green and clean image but earlier this year a supply of zinc oxide from China imported on an out of date certificate of analysis, caused a major residue alert in Western Australia.  The zinc oxide contained high levels of lead contamination (>85,000 ppm).  Tests on pigs fed diets containing the zinc oxide were found to have high levels of lead in red offal which was disposed of, at considerable expense, before it entered the food supply chain.

After months of despondency the rise in pig meat price and the marginal fall in feed price provide a glimmer of hope for the Australian industry.  For the industry to regain confidence and invest in new technologies, a lengthy period of profitability is essential.