Dr. Roger Campbell - The Future of Pork Industries

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The Future of Pork Industries - Dr. Roger Campbell - Pork Cooperative Research Center (CRC), from the Swine Forecast 2011 webinar, December 1, 2010.

http://www.swinecast.com/swine-forecast-2011

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Dr. Roger Campbell - The Future of Pork Industries

  1. 1. The future pork industries – challenges and opportunities 2011 and beyond
  2. 2. AUSTRALIA –SMALL BUT REFLECTS TYPICAL DEMAND AND SUPPLY SITUATIONS Population – 22 million Pigs – slaughter 5 million annually Pork production – 350,000 -450,000 tonne annually Import 140,000-150,000 tonne (carcass equivalents) annually 1500? Producers COP - $2.06 USA/kg carcass weight (2010) Price - $2.50 - $2.70 USA/kg carcass weight (2010) Per capita consumption – 26.5 kg (58.3 LB) Unlimited grain (wheat ,barley ,sorghum) but increasing risk of droughts No major diseases (PRRS, PRCV2, SIV)
  3. 3. Efficiency of production 2009-2010 Business Indicator Average Top 20% Pigs weaned/sow/year 21.8 24.5 Carcass weight (kg) 73 90 Carcass sold/sow/year (kg) 1580 2060 Feed cost ($USA/tonne0 340 290 HFC (kg/kg carcass weight) 3.85 3.4 HFC (MJ DE/kg carcass weight) 52.4 47.5 HFC (Mcal/kg carcass weight) 12.5 11.3
  4. 4. Pork and grain prices 2004-2010
  5. 5. Modelled Producer Profitability Assumptions Feed conversion 4:1 Non grain feed costs - $100/ tonne Non feed costs - $1.00/ kg Monthly average feed grain price Eastern seaboard baconer price 2009/ 2010 Year
  6. 6. Profitability ($/kg carcass weight)
  7. 7. Pig slaughter in Australia (05-10)
  8. 8. Carcass weights (kg)
  9. 9. Imports (1993-2010)
  10. 10. Origin of imports
  11. 11. THE USA INDUSTRY –EXAMPLE OF GLOBAL SITUATION
  12. 12. Productivity in the USA pork industry
  13. 13. Changes in the structure of the USA pork industry
  14. 14. Pig price (cents/LB LW) between 1989 and 2008
  15. 15. Profit over time (cents/LB live weight)
  16. 16. Domestic growth –limited by flat demand
  17. 17. The “good” news -Exports
  18. 18. Global business indicators 2007 Business Indicators USA Canada Brazil Denmark Netherlands Pigs weaned 22.9 22.3 20.0 26.4 24.7 Carcass weight Carcass 93 94 79 82 89 Carcass weight (kg/sow/y) 1945 1935 1406 2003 2200 Feed costs ($/tonne) 265 339 350 336 348 HFC (kg/kg carcass weight) 3.80 3.56 3.80 3.75 3.62 HFC (MJ DE/kg) 55 44 52 50 49
  19. 19. SECRETS TO SUCCESS -AUSTRALIA Continue to enhance efficiency of production and address grain volatility Take lead in the welfare issue and use to differentiate Australian production and product (have retail ,community and consumer support) – reduce imports Improve quality of product –demand Tap into higher end Asian markets Better understand feed costs (go way beyond cost of grain) Cost plus supply contracts
  20. 20. 2011 Big harvest and weather damaged grain in 2010-2011.Feed cost will average $320-$360/tonne and vary across states Price is less predictable but could return towards longer term average - $2.50/kg over 2011. COP $2.26 to $ 2.32/kg. Margin $ 0.18 to $ 0.24/kg carcass weight ($13 to $17.50/pig) with little room for mistake.
  21. 21. SECRETS TO SUCCESS -GLOBAL Continue to enhance efficiency of production and actively address likelihood of increasing and volatile feed costs Exploit growing global demand for pork and cost advantages – more exports and better understanding global customer demands Develop risk polices and other means of ensuring export markets are maintained Be aware of growing welfare and environmental concerns – they are likely to affect all countries directly and indirectly Cost plus supply contracts
  22. 22. 2011-GLOBAL Europe likely to remain under pressure on prices and grain/feed costs but the global price cycle is currently on an upward trend . USA and Canada looking at reasonable but tighter margins than 2010 with price being affected by exports and domestic supply – but futures are positive. Likely to be a slight further global consolidation of pork industries in 2011 Many unknowns remain with grain prices likely to remain volatile and domestic demand in Europe and N America (globally ) remaining flat
  23. 23. Beyond Technology? At an industry level need to ensure plans in place to address ‘emergency” situations (HIV2,food contamination etc) and prevent or minimise consequent price declines Attempt to get ahead of social and welfare issues likely to affect community and consumer perceptions of the industry and demand for pork ( sow housing , pig management , environmental issues, general welfare) –innovation lacking and sorely needed needed. The issue in Australia and offers real opportunities – don’t get caught out. Innovation in product quality and variety –increase demand. What do national and international consumers want?

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