PORK prices have been rising off the extreme lows of the past two years, but profitability remains an issue for producers on the back of high grain costs.
Pork SA chairman Mark McLean said how much extra money producers were receiving depended on their markets.
“With some long-term agreements, those producers might not notice much movement in price,” he said.
“With hooks prices, there have been rises of 30 cents a kilogram to 40c/kg from the extreme lows farmers have been faced with. But we need to keep it in context.
“The challenge we have now is much higher grain prices, which have put up feed costs. The feed cost has risen 60c/kg to what it was nine months ago.”
Despite the increased feed costs, Mr McLean said there was an improved feeling in the industry.
“A lot of farmers are feeling more positive,” he said.
“It’s great that the market is moving in the right direction, but the reality is most people are probably moving from a serious loss-making situation into nearly breaking even.”
Mr McLean said it was good to see strong demand for Australian pork leading into Christmas and he was hopeful the upward price trend would continue in the new year.
“Traditionally, there’s been a softening in demand in January but in recent years there’s been very strong promotion of Australian pork towards Chinese New Year, with pork being such a strong staple of Chinese diet,” he said. “I think that, going into 2019 with reduced supply, we’re likely to see stable prices and possibly even increasing prices.”
Mr McLean said even if prices continued to rise, reducing debt levels would be a long-term process.
He urged people shopping for their Christmas hams to try and ensure they were buying Australian product.
“We want to get the message out about country of origin labelling and the importance of looking for at least 90 per cent Australian content,” he said.
“We appreciate people’s support and ask them to get some Aussie ham on the menu at Christmas time and some Aussie pork on the barbecue and we’ll do our bit by continuing to buy grain from local farmers.”
Looking long-term, Australian Pork Limited chief executive officer Andrew Spencer said the organisation aimed to lift the nation’s pork exports from 10 per cent of production to 30pc.
“A major reason why we’ve gone through this challenging time in the past two years is the fact we rely so heavily on the domestic market,” he said. “If export markets grow, we’ll have increased capacity to work through supply issues.”
Feed costs major unknown
MURRAY Bridge producer Greg Davis, Aroora Enterprises, says one of the biggest challenges at the moment is weighing up whether to lock in grain at today’s high prices.
After a tough season in the Murraylands region, he has had to go further afield to source grain this year.
“It has also been the most expensive grain I’ve ever bought at harvest before,” he said.
“All the straw bedding for our pigs, I usually get off our own farm but I’m having to buy that in as well. We rely on straw for bedding, so it’s not something you can skimp on.”
Mr Davis is hoping the recently-sown Qld/NSW sorghum crops are good this year, so there was less southern grain demand from the northern regions.
Pig prices improved at the first Dublin sale in December, with female baconers topping at $3.31 a kilogram and averaging $3.06/kg. Even male baconers made to $3.14/kg at the early December sale. But this week prices came back to an average of $2.78/kg for female baconers.
“There were 485 trade pigs in this week, last week there was only 300,” Dublin auctioneer Garry Tiss said.
“When the market gets another 150 pigs in, it knocks it about.
“Female baconers made to $3.12/kg this week but that was in the first pen and then it dropped away.”
Mr Tiss believes the industry has turned a corner.
“At least producers can see a light at the end of the tunnel. It’s looking much more promising,” he said.
“The only problem now is the price of grain. If there was a good sorghum crop, it would take some of the pressure off the domestic feed market.”
The final Dublin pig sale is on next week before a two-week recess.