High feed prices put pressure on farm profitability
Exports up13 % yoy
The industry continued to struggle with an oversupply of pigs and high feed costs, despite increasing consumer demand. Exports continued to grow steadily, but remained significantly lower than for other proteins.
The industry cited numerous challenges, including an oversupply of pigs and high feed prices, which put downward pressure on farm profitability.
The shift toward heavier carcasses reflected the lower marginal costs of production and higher margins. The Pork CRC estimated the margin on a 75 kilogram carcass was 26 cents per kilogram, compared with 33.5 cents per kilogram for an 80 kilogram carcass25.
Consumer preferences toward pork showed a long-term increase. Apparent consumption was 27.3 kilograms per capita in 2015–16, with consumer demand supported by retail pork prices becoming increasingly competitive against beef and lamb12. Retail prices in NSW were only 3% higher than in June 2015, compared with a 10% increase for beef and veal, and a 13% increase for lamb and goat meat.
Exports of pork increased to $31.1 million, up 13% year-on-year. Export prices increased 7% on average despite a higher Australian dollar over the year. This was due to changes in the mix of pork products exported. NSW’s pork exports primarily went to Singapore ($11.3 million), New Zealand ($6.3 million) and Papua New Guinea ($4.4 million)54. In Singapore, NSW pork competes with product from Brazil, Netherlands and Spain94.
Imports of pork declined to $147 million. Imports from the US, usually the second largest partner country for pork, decreased by 22% to $31.8 million54. NSW imports most of its pork products from Denmark ($67.0 million), mostly as middle cuts.
The US, one of the largest global pork producing countries, experienced tariff increases of 25% for pork products into Mexico and China, two of its five largest markets. This may lead to greater competition from US producers in other international markets94, 67.
Tariffs on Australian pork into China are 4%, but will reduce to 0% in January 2019 as a result of the China Australia Free Trade Agreement. Despite this, NSW pork exports to China remain low compared with other destinations and other protein exports to China. Negotiations for an import protocol with China are ongoing, with the establishment of a protocol expected to open up the Chinese market to Australian pork producers24.