COMMENDABLE productivity gains and consistently good herd feed conversion (HFC) rates, it might not be quite enough to offset the downside of an internationally uncompetitive cost of production (COP).
This was the blunt warning delivered by CRC for High Integrity Australian Pork chief executive officer Dr Roger Campbell in his opening address at the 2017 South Australia Pig Industry Day.
“The marked decline in our global competitiveness compared to 2014 is due to our feed costs going down slightly and those of all other countries going down substantially, resulting in the biggest differences in COP we’ve seen for 10 years,” Dr Campbell said.
“The recent disparity in grain prices and feed costs is unusual and may only be a blip in the usual pattern, which is generally consistent across the globe.”
Australia has the highest cost of production at A$2.80/kg carcase weight. The US is the lowest at $1.60, then Brazil $1.71, Canada $1.80, Denmark $2.10, Netherlands $2.23, and Great Britain on $2.63.
Dr Campbell said with a bumper 2015-16 grain harvest in Australia, grain costs would fall in 2017, but all other countries will also enjoy price falls.
“While actual feed costs remain unknown, they might not be as low as some anticipate, especially considering that while grain prices have fallen substantially they only make up half of our pig diets, so the decline in feed costs will not be as large,” he said.
“Potentially, this makes Australia’s pork sector more vulnerable to imports and price falls, but we have an edge in terms of the high integrity pork we produce, our emphasis on high welfare and enhanced provenance,” Dr Campbell said.
He said it was also being backed up by significant increases in investment in Pork CRC grower-finisher research and development.
“I think 2017 will be a challenging and potentially uncertain year, with evidence emerging of unexpected pressure on price and this is clearly a concern to producers, as was clearly evident at the SA Pig Day,” Dr Campbell said.
“On an optimistic note, given the quality of pork we produce and the provenance behind it, processors and retailers recognise the inherent value of high integrity Australian pork.
“I therefore hope buyers and ultimately consumers, will acknowledge the higher COP in Australia and continue to support the industry, as they’ve done for the past several years while our pork producers initiated and delivered a globally recognised and quite remarkable industry transition,” Dr Campbell said.
