Low pork prices and high grain prices impacting profits for pork producers
This article services as a reminder for our producers to keep a careful eye on gross margins and overheads as things are going to get tougher before they get better.
Key points:
- The high cost of grain and low prices for pigs at the saleyard mean producers lose money on every animal they sell
- As many as 80% of NSW pig producers have left the industry
- Imported pork is cited as an issue, with up to 95% of pork in supermarkets imported from countries that subsidise farmers
Pig producers in New South Wales are battling a combination of factors that have seen as many as 80% of them selling all their pigs and leaving the industry.
One producer said he was spending $8,000 every week to feed his pigs.
Recent figures from the Federal Department of Agriculture showed pork imports fell 13 % between 2017 and 2018. Others speculate an oversupply of pig producers has forced the downward trend in prices for Australian producers.
Saleyards deserted
In NSW, only two pig sales are held at saleyards. At Camden, in south-west Sydney, sales are held every Tuesday, while at Forbes, in the state’s central west, they are held every second Friday.
It wasn’t long ago that the sales attracted large numbers of buyers and sellers at saleyards, but those numbers have been steadily sliding with most saleyards now not dealing with pigs.
“Six months ago we were getting 600 pigs at every sale here in Forbes; now we’re lucky to get 200,” stock agent Murray Reid said. “We’ve lost probably 80% of producers in NSW and Victoria recently, and sourcing local pork in the butchers is only going to get harder.”
Pig prices aren’t matching grain prices and grain is becoming harder to find.
In recent weeks, producers at the Forbes saleyards have been receiving $3.80 a kilogram for pork and around $4.00 a kilogram for bacon whereas, in the past, they got up to $7 or $8/kg for pork.
Now the farmers aren’t making enough to even cover their costs.
Pork import criticism
For the small group of pig producers who attended the pig sales in Forbes, there was general frustration at what they believe was a lack of promotion of Australian pork, however the real problem is continually having to deal with imported pig meat which stymies Australian pork prices.
There is also a perception that it is too difficult for consumers to work out whether the pork product they are buying is Australian or has been imported.
Countries like Denmark, the US and Canada have subsidies for their farmers — meaning they can bring pork products into Australia for cheaper than it costs Australian producers to bring their pigs to the saleyards.
Promoting pork in cities
Despite the criticism from farmers, the organisation responsible for promoting Australian pork — Australian Pork Limited (APL) — is adamant it is doing what it can to encourage people to buy local.
“We are investing the maximum $5.5 million a year into promoting pork and as a result we’ve seen the consumption of pork grow faster than other sources of protein,” APL’s General Manager of marketing Peter Haydon said. “We’re very focussed on promoting into the cities where consumers are, not into the country where the farmers are.”
APL said it was aware of the concerns from pig producers, particularly packaged bacon in supermarkets that are imported from the US and Canada.
“The reason a lot of what is for sale is not Australian is because of Australia’s high cost for energy, labour and grain, which makes local pork more expensive than imported products,” Mr Haydon said. “Consumers need to be prepared to pay more to buy locally grown pork.”
APL has started a country of origin labelling trial at one supermarket in an attempt to see if it will encourage more consumers to buy Australian pork products.
Where to for QLD pork producers?
At Carrick Aland Accountants we’re reminding our producers to keep a careful eye on gross margins and overheads as things are going to get tougher before they get better.
Ensure that your customers are also paying you on time, as the entire supply chain is feeling the effects of the tight pricing and it only takes one weak link the supply chain for things to collapse.
