Pork squeeze: prices, feed costs hit home

Up to 80 per cent of pig vendors abandon industry in central-west

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The number of pigs for auction at Forbes has almost halved in the last month as the drought, feed costs and poor prices drive producers out of the industry. Up to 80 per cent of traditional vendors to Forbes pig market have quit the industry. Photo by Rachael Webb.

The number of pigs for auction at Forbes has almost halved in the last month as the drought, feed costs and poor prices drive producers out of the industry. Up to 80 per cent of traditional vendors to Forbes pig market have quit the industry. Photo by Rachael Webb.

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It isn't hard to see how tough it is for pork producers at the moment with the Forbes pig sales seeing a major fall in pigs for sale, as prices fail to get off the floor, while costs soar.

Australian Pork Limited says pork producers "just became too efficient" and an oversupply a few years ago saw prices fall, and they've never recovered. And costs, especially feed bills, have driven producers to the wall.

The loss is quite staggering. It's a pork squeeze, a lot like the dairy industry. At Forbes, up to 80 per cent of vendors to the Forbes sale have given up on pig production.

Major pork marketers say just a lift of a $1 a kilo (at the moment baconers attract $3.35 a kilo, with producers saying they are losing $40 a head) would help the situation and would not change the price of pork for the consumer at the butcher. Pork prices are often inflated, pig marketer Brian Jack said, by butchers to make up for lamb and beef pricing.

Imported pork is also causing a major squeeze on the industry and the Australian product, one of the best managed in the world, is suffering. Almost 95 per cent of bacon sold in supermarkets is sourced from overseas product.

The other dilemma facing the industry is that there is a consumer backlash against male pigs, fearing boar taint, when at sale time such a taint is non-existent in young pigs. Also pork is moving slowly at the moment, even though it is the most consumed meat on the planet. Australians consume around 24.2 kg of pork per person (9.2 kg of fresh pork and 15 kg of processed products such as ham, bacon and smallgoods).

Stock agent Murray Reid, VC Reid and Son, Forbes, says he has seen 70 to 80 per cent of vendors to the Forbes pig sale leave the industry, mainly because of high feed costs. "A lot of people in this area have a few pigs but when the price dropped they started feeling the pinch and got out." Forbes auction often has 500 or 600 pigs yarded, but at the most recent sale only 220 were yarded. "The first thing they have to do is try and limit imports. Until we get a decent crop and that reduces feed costs I just don't know what the answer is, to say the honest truth. If we have no crops soon we will have no pigs left."

I just don't know what the answer is. If we have no crops soon we will have no pigs left. - Murray Reid, VC Reid and Son, Forbes

Australian Pork Limited's general manager marketing, Peter Haydon, said he could some light in pork prices going up as supply tightened in the next six months. Mr Haydon said he understood many pork producers were doing it tough, but said there was little that could be done to limit imports, as "everything is based on scientific based risk assessment".

"What happened was that when producers in 2015-2016 were getting good prices, they became more efficient and then there was an oversupply and prices fell. People are now hurting there is no question about that."

Nigel Armstrong, 65, has been a pork producer since he was 10 years of age but now he's thinking of giving the game away.

Just trying to keep his pigs alive is causing family ructions at the Gilgandra property, where he's spent $400,000 on feed for his pigs and sheep in the last two years. The last shipment of barley he bought at Narromine, that was brought in from Western Australia, cost him $440 a tonne.

Peter and Nigel Armstrong say feed costs are driving them out of the pig industry. Photo by Rachael Webb.

Peter and Nigel Armstrong say feed costs are driving them out of the pig industry. Photo by Rachael Webb.

When you're selling baconer pigs for just $3.35 a kilo, it's not hard to see why it's all adding up to a nightmare economic situation. "To break even we need at least $4.50 or more a kilo," Nigel says.

The pig squeeze is forcing some tough decisions. But getting rid of the pigs on his family's mixed farm Coomboona, Gilgandra, is not something he wants to do. He loves tending to the pigs and taking that trip with a truck of prime pigs down to sell them over the hook at Breakout River Meats in Cowra. And he takes pride in knowing he's produced the best pig possible for consumers.

But there's no pleasure in just breaking even. He reckons he got far more for his pigs per kilo 10 years ago. He's down about $40 a head. The system, he says, is simply bleeding him dry - and it's dry enough already at Coomboona with his his son Peter forced to find work off-farm in the mine. He was set to take on the 100 sow operation but each day that's looking less likely.

"I don't know really what I'm going to do," Nigel says. "I'm just holding in there, but many pig producers have gone to the wall. It's just getting worse, people can't afford the feed. It's a real pity too, pork is a good meat, but everything is moving slowly at the moment. The newer pigs are 'just right'. The pigs are five-and-a-half months when we sell."

Unlike some industries, Nigel can't turn around and take his pigs home if he doesn't like the price offered. When they are ready for sale they have to be sold. There are now fewer pig abattoirs around with the loss of Gunnedah and Tamworth facilities. Most pigs in NSW are sent down to Victoria for processing.

"I want my son to take over but everything we get is going back into the feed. He's been forced to go and get a job off the farm." The Armstrongs have had just 50mm of rain this year, with just 8mm in that rain event. Not that far north at Coonamble some have had over 100mm in the last month.

"If i could get a crop in I could halve my feed costs," he says. "If we just had two inches of steady rain we'd be fine. We've had no money for improvements for years for sheds or anything."

He says it's impossible to compete with subsidised imported pork. "We just can't compete with them and the retailers don't care," he says.

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