The pork industry in Western Australia is in a renaissance
A comprehensive review of the potential for expansion of the pig industry in Western Australia, concluded that Western Australia has the resources, location and business climate to be competitive in the export market for pig meat. This is complemented by the Government of Western Australia's strong support for the establishment and expansion of industries targeting export market growth, particularly in the area of agricultural production and processing.
Currently the Western Australian pig industry is relatively small, with approximately 36,000 sows producing 37,500 tonne of carcass weight annually. The majority of pork produced is consumed within Western Australia and around 6% of production is exported. The pig industry review, has suggested a target size for the industry of 53,000 sows, producing 91,000 tonne of pig meat, with 35,000 tonne of product being exported.
The recent major disease outbreaks and associated events in Asia and Western Europe offer the ideal opportunity for major operators to invest in the pig industry in Western Australia. The advantages of such an investment are outlined in the following analysis.
The pig growing region of Western Australia is predominantly located in the south west corner of the state. This region has a Mediterranean climate which supports a wide range of agricultural activities and has easy access to the growth markets of Asia.
In 1999 there were around 440 pig herds in WA with approximately 35,900 sows in total. The average herd size of 82 sows is large by international standards, which means that the adoption of new technology is likely to be quicker and more effective. Better performing producers are marketing in excess of 21 pigs per sow per year.
In the year to June 1999, 37,500 tonnes of pig meat were produced in WA compared to national production of 370,000 tonnes. Based on the above sow numbers, production per sow was 1.04 tonnes. Eighty percent of production is based on Large White x Landrace sows, although all major breeds are available in the state.
Average pig carcass weights in WA have increased over the last five years and most of WA's top performers are now marketing pigs at 100 -110kg liveweight (68 . 75kg carcass weight). Efforts are underway to increase carcass weights further to take advantage of production and processing efficiencies.
There are several abattoirs in Western Australia that process pigs but the two major abattoirs process 80% of the state's throughput. The state's largest processor, Watsonia, has the third highest throughput in Australia at its specialist abattoir, slaughtering an average of 7,300 pigs per week. Watsonia is currently the only export registered pig abattoir in the State.
Average pig processing costs in Australia have been higher than in Europe and the US. However under Australia's new industrial relations legislation, the environment has been established for the introduction of best practice techniques and the adoption of the latest technology to ensure that pig processing costs are world competitive.
A prefeasibility study was conducted in 2000, on the establishment of a new export abattoir in Western Australia, capable of processing one million pigs per year. The study confirmed the improvement in efficiency arising from increased capacity and utilisation and indicated internal rates of return of 20%-30%.
A number of new opportunities for marketing pig meat are emerging both domestically and internationally. The Uruguay round of GATT created fresh opportunities to enter new markets but also exposed the domestic market to competition from imports. Recent disease outbreaks in pig herds in Malaysia and South Korea have created major market opportunities in Asia.
International trade in pork increased by 28% between 1994 and 1998 to reach 2.8 million tonnes or 4% of world production. Trade in pig meat has traditionally been largely to countries in close proximity. However in recent years trading patterns have been changing with new markets emerging in countries such as South Korea, increased exports from countries such as the USA and Canada and disease outbreaks affecting exporters such as Taiwan and Malaysia.
Singapore has emerged as the major export market for pork from Australia, following the outbreak of Nipah virus in Malaysia in 1998. Prior to the disease outbreak, Singapore imported approximately 1.2 million live pigs per year; 1 million from Malaysia and the balance from Indonesia. Because of its location, Australia is able to airfreight fresh chilled sides of pork to Singapore more competitively than other exporters. Australian exports in 1999 amounted to 15,600 tonne.
Japanese imports of pig meat have grown considerably in recent years from 503,000 tonne in 1994 to 600,000 tonne in 1999. Around 27% of pig meat imports are chilled and the balance is frozen. Australia exported around 5000 tonne of pork to Japan in 1999 and exports are expected to increase.
Exports of pork from South Korea had grown considerably in recent years, in response to the ban on pork exports from Taiwan to Japan and assistance for the industry from the Korean government. Exports to Japan rose to over 80,000 tonne in 1999 but ceased in 2000 following the outbreak of foot and mouth disease in South Korea. The outbreak of foot and mouth disease provides a market opportunity in both Japan and South Korea.
Until 1997, Taiwan produced around 1.2 million tonne of pork annually. The outbreak of foot and mouth disease resulted in a dramatic reduction in production and created export opportunities in Japan for other suppliers. The pressure of environmental concerns and high production costs suggest that the Taiwanese pig industry will continue to decline. This and Taiwan's entry into the WTO will provide opportunities for increased export to Taiwan.
Traditional producers of pig meat in Europe are not in a position to expand production to meet the emerging demand in Asia. Environmental legislation is a severe constraint on production in Northern Europe. Pig numbers in the Netherlands will continue to decline as a consequence of tightening environmental controls. Production in Denmark, Germany, and the UK is more likely to decline rather than increase for the same reason.
Growth in pig meat production in the USA is steadily rising and restructuring has moved that industry to world competitiveness. Export growth is expected to average .9% per annum in the coming years and self sufficiency on its domestic market will also force more Canadian pork onto the world market.
The pig industry review concluded that export markets already exist for pig meat products at prices and conditions that should be attractive to exporters based in Western Australia. Most of the indications are that demand is likely to grow in future and that significant high-value market segments will emerge. Investment in internationally competitive practices and facilities is needed to capitalise on these market opportunities.
Consumption of pig meat in Australia has increased steadily over the last 20 years at an annual rate of approximately 2.5%. Current per capita consumption is approximately 20 kg per annum.
Western Australia has 12% of Australia's pig herd and produces around 570,000 pigs per year, yielding 37,500 tonne of carcass meat. Approximately 30,000 tonne is consumed in Western Australia and several thousand tonne is sold into the eastern states of Australia. Exports from Western Australia in 1998/99 were valued at $A2.2 million, with Singapore the major market.
There are many reasons why Western Australia is a competitive site for locating major pig production and processing businesses.
Production Costs and Returns
The average production cost per kg of liveweight is $A1.50 or $A1.99 per kilo carcass weight, which compares favourably with average production costs in Denmark and the Netherlands. The state's best pig producers have production costs below $A1.50 per kilo liveweight, which is highly competitive by world standards.
The direct costs of operating in Australia are amongst the lowest in the OECD and increasingly competitive when measured against the rest of Asia. Australia's costs for such major running costs as electricity, gas and water are highly competitive.
With total grain production in excess of 10 million tonne per year, Western Australia is a major supplier of feed grains at competitive prices. On farm prices for feed barley are around $A115 per tonne and for feed wheat around $A110 per tonne. There are three major feed mills in the state and pelleted rations are around $A250 per tonne, delivered to farm. The grain growing region covers a wide range of climatic zones and hence the risk of crop failure due to climatic conditions is very low.
Herd Health Status
The Australian pig industry, largely due to very strict regulations on the importation of animals and animal products, enjoys one of the highest health status environments for growing pigs in the world.
The following diseases, which are present in many pig growing nations around the world, are not present in Western Australia:
- Foot and Mouth disease (FMD)
- " Porcine Reproductive and Respiratory.
- " Transmissible Gastric Enteritis (TGE)
- " Aujeszky. s disease
- " Swine Fever
- " Porcine Endemic Diarrhoea (PED)
- " Rabies
- " Swine Influenza
Abundant land and water
Agricultural land in Western Australia is very low priced by international standards, which adds to its appeal as a prime location to raise pigs. The large expanse of relatively cheap land that is available for pig production, means that environmental issues are less of a constraint to development of the industry in Western Australia than in most other pig producing nations.
Western Australia also has more than adequate supplies of water in the major pig producing areas either from natural aquifers or a state managed distribution system.
The temperate climate in the south of Western Australia is ideally suited to pig production in that there is no need for heating during the winter months and high summer temperatures are only experienced for short periods. The mild climate, particularly in the south of the state, is very suitable for extensive rearing of pigs.
Proximity to Asian markets
Western Australia is unique in Australia as it is the only state operating in the same international time zone as most of Asia. Each week there are over 50 direct flights from Perth to the main Asian capitals as well as five vessels sailing to south east Asia from the state. s major port at Fremantle.
Research and Development
The provision of research and development services to the Western Australian pig industry is centred around the resources of Department of Agriculture, the University of Western Australia, Muresk Institute of Agriculture .(Curtin University) and the School of Veterinary Studies .at Murdoch University. Researchers at these agencies .are acknowledged authorities in lactation and sow nutrition, growth and development, applied modelling, nutritional effects on disease, alternative housing systems and effluent disposal.
Establishing a new Pig Raising Operation in Western Australia
The capital cost of establishing a new 1000 sow farrow to finish piggery is estimated to be $A4000 per sow.
Department of Agriculture and the West Australian Pork Producer's Association have produced an introductory publication for those who wish to further pursue a stake in the West Australian pig industry.
The approach to environmental policies and regulations in Western Australia has been described as responsible but realistic. Control on polluting practices will depend on the current and anticipated impact on the environment and the capacity of the environment to absorb any additional loading.
A booklet titled "Environmental Guidelines for New and Existing Piggeries" has been prepared. Advice is also available from the Western Australian Government to assist prospective operators to establish new piggeries and pig processing facilities in the state.
The coastal strip around Perth and to the south of Perth is particularly sensitive and is likely to remain so as the population increases in this area into the next century. In other areas of WA the current level of impact on the environment is modest and emissions from increases in pig production and processing should be bearable. Low population density in rural areas reduces the environmental pressures on agriculture compared with other high population density pig growing and exporting nations.
The capital cost of waste treatment systems is typically in the order of 5% to 6% of the total capital cost. For a 100 sow piggery in Western Australia, this would represent an establishment cost of $A20,000 to $A30,000.
The steps required before a piggery can be established are described in the following table.