Page 4 - Australian Pork Newspaper

2018 – a year to learn from in the pork industry
THE only real value of bad years is to learn from them.
This past year has cer- tainly been no fun at all from a profitability per- spective.
The oversupply wors- ened before it started to improve and experts are now expecting terrible things for grain prices in the coming year, so what is there to learn?
From an industry per- spective, there have been a number of learnings.
The biggest of which we should focus on is predic- tion.
How do we forecast bet- ter?
First, there appears to have been a significant increase in production ef- ficiency.
Depending on who we listen to, that has coin-
Marketing Matters
cided with progress by the genetics companies and producers becoming more practiced at group housing of sows and with larger than the normal in- vestments in building and maintenance in 2015 and 2016.
Productivity is a good thing – it just so happens that in 2018 it has added to the oversupply.
There were several
ideas raised at the recent Australian Pork Limited Delegates’ Forum (held November 14) that may improve our ability to predict growth.
These include asking producers to give the pro- duction survey a longer- term outlook for their business and more fre- quently, as well as involv- ing more people (not just producers but feed suppli-
ers, abattoirs and genetics companies).
Second, historically the pig industry cycle lasts five to seven years with about two years of good times from a price per- spective and three to five years of below-trend pric- ing.
The sense at the Dele- gates’ Forum, in my opin- ion, was that prices are recovering towards trend, which means we have a minimum of three years and a maximum of five years to get the industry into a more resilient posi- tion than it was in 2016.
Some of the initiatives that might help with that would require a change in emphasis by both APL and industry.
For example, we have been focused domestical- ly, and as an industry we
have not collaborated to build additional sustain- able international markets for Australian pork.
However, there has been a co-funding arrangement from some exporters to work together to get ac- cess to China.
While that remains a long-term goal, it may be possible to extend that thought to developing more international busi- ness generally.
Second, we had contin- gency marketing activi- ties that had been devel- oped in 2015 and 2016.
We had not arranged a method of funding addi- tional activity.
Wewere–andare– on a mission to increase sales, so we were already marketing as aggressively as we could afford.
This meant we didn’t
have enough funds to significantly increase ex- penditure.
We have three to five years, based on history, to change that position.
Third, when we had a few profitable years in a row up until the end of 2016, producers invested in facilities improvements or expansions.
Edwina Beveridge stood up at the Pan Pa- cific Pork Expo this year and showed a way that feed costs could be significantly reduced through food waste in- novation.
If we get into a posi- tion where we have a few profitable years in a row, it would be great if we could have a few invest- ment options that focused on margin by signifi- cantly reducing cost of
production rather than increasing production volume.
That would help reduce volatility and make our industry safer.
Finally, the APL Board asked KPMG to review our marketing activity this year.
That review found that while demand has in- creased significantly, there are further options for improvement.
In 2019, we plan to im- prove our digital mar- keting presence, build better relationships with producers and retailers, improve data availability and reporting and build the Australian pork prov- enance story.
We wish all industry participants a hopeful Christmas and producers a more profitable 2019.
Gen Y turns a blind
eye to food and
fibre production
SHOCKING new statistics have re- vealed that young Australians aged 18- 29 are the most likely to say they don’t care at all how their food and fibre is grown.
The 2018 National Agriculture Day Poll conducted by TEG In- sights has found that almost a quarter (23 percent) of people in this age range say they don’t care at all how their food and fibre is grown.
This figure is 8 per- cent higher than for Australians aged 30- 49.
The AgDay Poll is commissioned annu- ally by the National Farmers’ Federation to gauge the commu- nity’s connection to the farm sector.
NFF CEO Tony Ma- har said the apathy displayed by 18 to 29 year olds is cause for concern.
“This is meant to be a demographic with a deep social con- science, yet almost one in four couldn’t care less how the food they put in their mouths is grown,” Mr Mahar said.
“While some might say this is a credit to the quality, safety and abundance of food and fibre we produce in Australia, it’s trou- bling that as a coun- try we’re growing increasingly discon- nected from life’s es- sentials.”
The AgDay Poll also found that more than half (52 percent) of 18-29 year olds felt disconnected with farming and unin- formed about the in- dustry.
This is unsurprising
perhaps, given 65 per- cent had not had any contact with a single farmer in the past 12 months.
“We have to do a better job at getting in front of the communi- ty and having an open and honest conversa- tion about what we do,” Mr Mahar said.
“Otherwise we risk seeing generations of Australians with no understanding of where their food and fibre comes from.”
The poll findings coincided with Na- tional Agriculture Day on November 21 – an awareness cam- paign led by the NFF to highlight the farm sector’s contribution.
“This year, we cel- ebrated AgDay under the theme ‘Grow for Good’,” Mr Mahar said.
“It’s all about high- lighting the progress our industry is mak- ing each year by farm- ing smarter and more sustainably.
“There is a great sto- ry to tell about Aus- tralian agriculture.
“Whether it’s strengthening com- munities by providing jobs, growing more food and fibre to meet surging demand or taking better care of our planet – each year we’re improving what we do, and making the world a better place to live.”
The public was en- couraged to wear green to support our farmers and take a moment to share the ‘Grow for Good’ mes- sage on social media, using the hashtags #GrowforGood and #AgDayAU.
Figure 1
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Page 4 – Australian Pork Newspaper, December 2018
www.porknews.com.au
by PETER HAYDON General Manager Marketing