Price lift as pork supplies weaken

A "depressed" local pork supply and China's slump in pork production has helped steadily increase prices for SA producers in the past six to nine months, according to PorkSA chair Mark McLean.

"Prices have just reached the most producers have received in a long time," he said.

Mr McLean said there was a domestic shortage of pigs and in the past 24 months, each week, 5000 to 10,000 fewer pigs were being sold in Australia.

"A lot of producers exited the industry because of low prices, and more demand and a lack of supply has pushed prices up," he said.

"Since ASF, a lot of imported pork supply that was used in ham and bacon products in Australia has reduced - product is no longer cheap or easily accessed by Australian processors."

Mr McLean said pork producers were making about $4 a kilogram dressedweight and he expected strong domestic demand for pork would remain, as well as increased prices.

"Competition for product going into China has increased and we encourage processors to build long-term relationships with local producers," he said.

Post the ASF outbreak, Rabobank senior animal protein analyst Angus Gidley-Baird, Sydney, said redistribution of overseas pork products that were intended for the Australian market was the largest impact.

"Canadian imports into China increased dramatically and the volume of product coming into Australia declined, so the impact of ASF is at present impacting Australia's market access," he said.

"The United States is Australia's largest importer of pork and if China and America come to a trade agreement, a solid reduction in volume coming onto the Australian market is expected."

Mr Gidley-Baird said this reduction was the "greatest opportunity" for local producers.

"The increased demand with reduced availability should mean steady prices for pork producers for a couple of years," he said.

"We are just beginning to see the impacts from ASF in Australia. When China begins drawing heavily on global supply for imports, the quantum of the volume needed is astronomical."

AFTER two years of receiving pork prices that did not cover production costs, a Point Pass piggery has welcomed increased returns and committed to rebuilding its breeding herd.

Pig farmer Henry Schutz said in the past month, he had made an on-the-hooks price of $3.80 a kilogram dressedweight, which is a price increase of more than $1/kg when compared with a few months ago.

But the Schutz family decreased their herd from 150 sows to just 60 breeders in the past two years in response to the falling prices.

"The market has restored slightly, but for two years we have been losing up to $50 a head," Mr Schutz said.

"So we decided that the less we produced, the less we could lose in returns.

"Prices are better. but cost of feed is high and we still have two years of bad prices to catch up on."

Mr Schutz also said despite a price rise, limited live market access since the closure of the Dublin pig market had impacted returns.

"The last time we sold at Dublin we made $277/hd and since then, we have only topped our price per head twice," he said.

"Essentially we are making less money now we do not have a live market in SA, so we are missing it greatly."

Mr Schutz attributed greater pork demand and higher prices to the increased cost of other proteins.

"The shortage of proteins and its increased price has helped consumers return to pork," he said.

"The processors are struggling to pay the top prices for lamb and beef so we are benefiting from that."

If pork prices could jump to $4/kg, Mr Schutz said it would help solidify the pig industry long-term.

"We have just begun to rebuild the breeding herd to its original size because long-term we believe the market will hold up," he said.

"If African swine fever outbreaks overseas result in less pork imports into Australia, that could strengthen the local market too."