Page 4 - Australian Pork Newspaper

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APRIL matters in May
☛ from P3
cost of production was $2.70, but with a wide variation.
It all suggests that producers in the group are keeping other non-feed costs under control and I’m not sure how or what effect this might have in the longer term.
Nevertheless, it gives me some confidence that if we can keep these other costs un- der control and dilute them by increasing volume (pigs sold/ sow and carcass weight – tar- get 2000kg/sow/year), then we may be able to get our COP below the $2.50 barrier and head towards genuine global competiveness.
Numbers game
We must do this to reduce the need for processors and others to import pork and then we can take back some of the import market in Australia.
This is our only real option for sustainable growth of our industry and our best chance to increase exports.
Results from some of the herds in Pork CRC and APRIL are reporting excellent repro- duction, with born alive for parity 1 and older sows hitting 13 and return to service inter- vals of four days.
We should be able to hit some of the targets given in my April column and take care of the pigs sold component of the vol- ume equation.
Carcass weight is a different matter, but there are signs it is increasing and every kilogram counts.
On the price side of the equa- tion, I’m not sure what can be done in the shorter term and it seems that globally 2018 will be difficult for most pork-pro- ducing countries and particu- larly so for China and the US,
though the situation in the US will be volatile and this could spread globally.
Western woes
The main message from the WA meeting was ‘oversupply’.
Peter Spackman from Craig Mostyn Group/Linley Valley Pork told the meeting slaughter had increased from 14,000 to 17,000 per week and while they were managing the increased kill, they were struggling with the additional boning.
It seems there’s carcasses going east and boned product coming back west.
It’s a real mess and Linley Valley is in lockdown mode, but with plans to increase ex- ports to countries other than Singapore, more differentiation of their product and adding value-adding capacity.
Peter said they had other plans, but he was unable to disclose them.
He and his team are manag- ing a difficult situation the best they can.
Prices queried
Australian Pork Limited showed quite a dramatic drop in WA prices, but questions were raised around the source of the information and if it reflected changes in contract agreements.
Like I said, a bit of a mess, but WA producers were generally quite positive.
I also learnt at the meeting that Karen Moore, one of the stalwarts of R&D in WA, is now Dr Karen Moore.
Well done Karen.
Fair COP
It’s obviously very tough out there at the moment and pro- ducers are doing their best to control costs and whatever they can to get a better price.
COP will probably determine the medium-term fate of most, but I wish everyone all the best and will ensure Pork CRC and APRIL do everything in their power to improve the situation.
www.porkcrc.com.au
WA’s Karen Moore is now Dr Karen Moore.
Linley Valley Pork is packed to the rafters with pork and strug- gling to keep up with boning at its Wooroloo, WA plant.
Remember the people
DURING the hard times, like the ones our producers are going through right now, it’s easy to focus on our own in- dustry problems.
Heaven knows, when sup- ply grows faster than demand, every producer hurts, and some more than others.
When we talk about demand, it’s easy to think about it in the way that its useful to us.
More demand for us means either more sales or the same number of sales at a higher price.
The people who are buying pork more frequently aren’t buying it to help us, though, they are buying it because they have either decided or been convinced to serve pork a little more often.
Consumers buy meat to make their loved ones happy (and solve their problem “what to have for dinner tonight”).
As consumers have the same problem every night, they learn what their loved ones want and serve that to them relatively often.
In fact, seven out of 10 meals cooked at home come from that family’s list of favourites.
This list of favourites changes slowly, and it’s not possible to predict when a change is going to occur in any one family.
So, we invest producers’ lev- ies in communicating with con- sumers on a continuous basis.
That is, since 2010 we have advertised on producers’ behalf either every week or every two weeks.
The only exceptions to this are in most years we have skipped a three-week period just after Christmas, because it appears to make no difference to sales, and we also generally do not advertise in June be- cause, again, it appears to make
Marketing Matters
no difference to sales.
Within the boundaries of
these facts, the Australian Pork Limited marketing strategy is ‘maximise demand all the time’.
APL allocates every year, the maximum (considering other industry priorities) we can af- ford to communicating to both consumers and supply chains.
We do not build up war chests for rainy days for two reasons.
First, the people who paid a levy definitely did not do it so we could keep it in our bank account.
They paid, in part, to build demand and we do that the best way the evidence tells us we can every fortnight.
Second, we communicate with Australians continuously because we are asking them to change their habits, which they do slowly, even when they are being continuously encour- aged.
This means we might appear to not be responsive when sup- ply grows faster than demand.
This is because we are al- ready spending everything we have and are doing it the best way the evidence we have tells us to.
We, like producers, wish we could turn sustained demand on like a tap.
Consumers are, for the most part, not prepared to do that as fast as we would like them to.
Their driver is happy fami- lies.
What will make producers’ families happy?
Demand getting ahead of sup- ply, probably.
There are anecdotes about producers in all states, particu- larly smaller ones who do not have a good mix of contracts, becoming desperate and some leaving the industry.
This is difficult to deal with on a human level.
No one wants another person to suffer and often in these cir- cumstances, our desire to help individuals is limited by what’s possible.
We all must do what we can to help, both nationally and locally, and several state farm- ing organisations are active in this area.
See Alister Oulton’s article on Page 18 to see what help is available to producers.
One potential ray of hope as we pull together the final pro- duction report is it looks like supply growth will moderate as we move into the second half of 2018.
If we can keep demand grow- ing, then we have a chance of a better time ahead.
by PETER HAYDON General Manager Marketing
Page 4 – Australian Pork Newspaper, May 2018
www.porknews.com.au