Page 3 - APN May 2017

Pork CRC project pipeline full and flowing
MANY business and in- dustry activities, as well as some travel, made for a rather hectic but very productive first four months of 2017.
Pork CRC held its final investment round, with the budget approved by the Board on February 28.
The Australasian Pork Research Institute Lim- ited board met for the first time on February 27.
We then had the South Australian Pig Day, the West Australian Pork Producers Association- backed WA Pig Day Out and the Victorian Pig Fair.
In the meantime, I at- tended the Midwest ani- mal science meetings in Omaha, Nebraska, US, a Feed Grain Partnership meeting in Queensland and an Aunir (AusScan) Board meeting in Singa- pore in late March.
The last week or so of April was a little qui- eter, but we are still in the process of negotiating agreements with those or- ganisations that were suc- cessful getting projects approved in the eighth and last Pork CRC investment round and we’re gearing up for the first investment round for APRIL.
Price points
All the talk at the Aus- tralian industry meet- ings was around the quite sharp fall in pig prices, which started not long af- ter Christmas.
While many opinions and suggested reasons were aired for the decline, whatever they are the out- come is supply has ex- ceeded demand.
To perhaps make you feel better, I’ve summa- rised the prices received in other countries in the last week or so of April in Table 1.
The Australian prices are from the latest pub- lication from Australian Pork Limited (April 21) and do not take into ac- count the impact of cull sows on the actual price received by producers.
This is likely six to eight cents lower than the prices quoted for progeny in the different carcass weight categories.
The US and Canada are in an oversupply and vola- tile situation and if you re- member the costs of pro- duction published in my March APN Pork CRC Initiatives column, there is certainly little money in the business in either
Initiatives
country at the moment. The Europeans are do- ing a little better, with prices having risen in the
past few weeks.
UK producers have
achieved a higher price, but remember they have a considerably higher cost of production than the Eu- ropeans.
Nevertheless, it’s now probably a reasonable margin.
The Chinese continue to do well, with some of the larger production com- panies reporting record profits for the first four months of 2017.
The South Koreans seem to have an extremely high price and while I know nothing about their COP, I imagine there is some money in the business.
So, it’ a mixed bag with a general oversupply of pork globally (except in China) likely to continue through 2017, with China and South Korea clear of export opportunities.
Australian average pub- lished prices and feed costs differ across states by about 18 cents/kg car- cass weight and up to $40/ tonne for feed.
Consequently, while the average margin is 50-55 percent lower than 2016 in some states/places, it could be 75-80 percent lower than last year. Profitable carcasses
The severity of the cur- rent situation is well il- lustrated by APL’s graph of average baconer prices versus average feed grain costs.
In January/February this year the graphs for bacon pig price and feed grain cost had almost come to- gether.
Let’s hope they widen over the next quarter.
The gap between porker price and feed grain cost is much wider (see Table 1) but if you run the num- bers for selling at 60kg, 74kg or 80kg carcass weight, assuming 22 pigs sold/sow/year and adjust-
ing price for cull sows and feed costs and HFC in line with weight, the story is clear.
Margin on a carcass (per kg) and sow basis increases with carcass weight by 38 percent and 64 percent re- spectively over the range.
This is due largely to a decline in costs other than feed, which falls from about $1.51/kg for a 60kg carcass to $1.14 for an 80kg carcass.
If you are good enough to sell 24 pigs/sow/year, the margin per kg of car- cass and per sow increas- es by a further 22 percent and 33 percent respective- ly for an 80kg carcass and similar for a 74kg carcass.
There is something to be said for productivity and volume.
Final round
As stated previously, we’ve just about complet- ed the eighth and final investment round for Pork CRC.
The call was made in November 2016, with all proposals now vetted and reviewed and those sup- ported by the R&D com- mittee in February 2017 went to the Board for ap- proval on February 28.
We received 37 pro- posals and the Board eventually supported 11, with a total cash value of $570,778.
Across the programs the number of projects sup- ported were:
• Program 1: five;
• Program 2: four;
• Program 3: zero; and
• Program 4: two.
There are some excel-
lent, even exciting propos- als in all programs and we are in the process of finalising project agree- ments with the successful organisations.
In Program 1 we have a great project on human en- richment for gestating sows from the University of Mel- bourne, two on lactation from SunPork SA and two following up on findings by Kate Plush and Emma Greenwood that grouping lactating sows in the last week of lactation and given boar stimulation increased subsequent litter size by 1.5-2 piglets.
The project involves the
☛ continued P4
Two newly funded Pork CRC Program 1 projects are following up on findings by Kate Plush (pictured) and Emma Greenwood that grouping lactating sows in the last week of lactation and given boar stimulation increased subsequent litter size by 1.5-2 piglets.
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Country
Price
Australia
45-60 kg carcass
3.34
60.1-75 kg carcass
3.08
75.1-85 kg carcass
3.02
>85 kg carcass
2.89
US
1.54
Canada
1.58
Denmark
2.67
Netherlands
2.73
Spain
2.93
UK
3.05
China
4.12
South Korea
5.67
Table 1: Recent pig prices ($A/kg carcass weight) for selected countries.
www.porknews.com.au
Australian Pork Newspaper, May 2017 – Page 3