Good year for Australian pork producers

After years of low pork prices and high grain prices, the year 2009 showed a turnaround in the fortunes of the Australian pork industry, Pork CRC chief executive officer, Dr Roger Campbell said in an interview in the Weekly Times.

"Despite record levels of imported pork, domestic prices rose to sustainable levels and grain prices declined, making Australian producers profitable," he said.

The Australian average pork price surged to close to 381 cents/kg (over the hooks) in 2008 and performed strongly over the past 12 months to finish at 364 cents/kg in 2009.

According to Campbell, the Australian pork industry escaped a potential disaster in the novel influenza A virus (H1N1) outbreak as some international competitors had to face losses by low domestic demand and temporarily being locked out of export markets.

In the United States, Smithfield Foods, reported a second quarter net loss of US$26.4 million despite lower production costs and a 13% reduction in the US sow herd. According to Campbell, the industry down under remained largely untouched by these factors.

Better times
He continued, "In marked contrast to the rest of the world, where prices have remained low because of the global economic downturn and possibly consumer concerns about the H1N1 virus, Australia's pork industry is looking forward to better times."

Domestic price increases have been largely due to a decline in the local supply of pork following the rationalisation of the industry in response to years of poor returns, Campbell said. "We've seen supply go down, but such large increases in price suggest the underlying demand for pork is very strong," Campbell said.

2010 prices
Prices in 2010 will depend largely on supply and demand, Campbell said.

"It's hard to predict what will happen with both of these; a supply-driven increase in prices is a lot less precarious than a demand driven increase," he said.

Tapping into the demands of a growing population, promoting extra competition and improving on-farm practices and productivity will all make for brighter future, he added.

Related websites:
Weekly Times
• Pork CRC

Or register to be able to comment.