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Pork producer discusses crisis in pork industry.



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PRESENTER

A South-West pork producer is claiming that the politicians have got it wrong.

Graham Moore, from Yarloop piggery, is most concerned that Senator Winston Crane is claiming the current crisis in the pig industry is caused by competition from low beef prices. According to Graham Moore that's a furphy.

 

MOORE

Senator quoted rump steak as $6.9g a kilo and went on to quote pork at $12.99 a kilo, My wife and I made a particular point of going to a large centralised, regionalised shopping centre th e very next day, and surveyed two of the major retailers, and what we did was we took out the stews, the trimmings and the roasts as being not really representative, and we looked across the range of the equivalent cuts of both beef and pork, and it was quite clear to us the average price of beef was, depending on which retailer you used, was approximately $2 a kilo dearer than the price of pork, and pork at $12.99 a kilo was a premium cut, and rump at $6.99 a kilo was a discounted special. So we really were concerned that people in positions such as Senator Crane can make such carte blanche statements without, you know, seeking facts of the true story behind it' and the fact of the matter is that pork has been discounted, beef has been down for something like OV8f two years, and in that period of time that beef has been down, we, as pork producers, have received some of the best prices ever.

 

So to simply dismiss imports as being a bit of a non-event, and to blame the cheaper price of beef, really indicated to us just how much out of touch with reality the senator was, and of biggest concern, of course, is if he is representative of the Federal Government, that ..~(tape cuts out)...

 

RICHARDSON

But is it too simplistic to say that the main cause of tho proble m is those Canadian imports, when we have an oversupply of pork in Australia it seems.

 

MOORE

No, it's not too simplistic. We certainly do have an oversupply of pork in Australia at the moment' Various figures have been around, but it seems to be a fairly accepted standard of around 5% increased domestic production since 1997, and this has peaked at around the February/March period of this year,

 

So.. but this is not unusual for the pork industry in Australia in general, it's always been cyclic. What's exac erbated the situation now is the fact that we have got a slightly increased domestic production, which was geared for a promising Asian outlook, particularly with the foot and mouth outbreak in Taiwan, and we felt that we had a fairly good market developing in Japan.

 

Unfortunately, coinciding with this, has been the fact that the Canadian imports have actually been nearly threefold what our bureaucrats in the ABARE said they'd be. So, you know, in simple bargaining terms the major retailers, which have a s ignificant monopoly control over the pork trade in Australia, are able to use the price of imports and the volume to manipulate and bargain down the local price.

 

RICHARDSON

Well one has to ask the question, why is the Canadians can get their pork ;n her c heaper after shipping it, well, many thousands of miles overseas, cheaper than we can produce it here in Australia7

 

MOORE

Well our industry believes, quite firmly, that there's a 16% subsidy on the price of pork being produced in Canada. Now that's not ne cessarily exactly on the cost of pork, it can be on the input such as feed and what-have-you, there's not a level playing field, and, quite frankly, Australia's been sold down the gurgler by the bureaucrats and politicians who really haven't done their homework when they went into the GATT agreement.

 

RICHARDSON

Now you mentioned the retailers, to what extent are they playing off Australian producers against Canadian producers, and perhaps the consumers aren't really gaining from it.

 

MOORE

Well, I mean, an y consumer that's listening to this interview now would know, quite clearly, that the sort of prices that they've been paying at the retail level, for whether it be beef or for pork, have not changed significantly. The fact is that 20 cents-a-kilo to a producer, on current prices, can mean the difference between bankruptcy or at least paying some bills. You've only got to look at the difference when you break that into a half-a-kilo pack of meat - that's ten or fifteen cents on a half-kilo pack of meat to the housewife' quite frankly she wouldn't notice it, but the ten or fifteen cents that we're not getting is a difference, as I said, between, you know, break-even or going to the wall.

And there has been some surveys done which show, quite clearly, that up until the January of this year, as the contract price moved upwards with bacon price, so did the butchers' wholesale price. So basically when you look at it on a graph form, both the b utchers, wholesale price, and the contract price of baconers' or the supermarkets' wholesale price, they basically stayed in parallel with each other, obviously with a margin inbetween.

But since January of this year, since our prices have been in free-fal l, those graphs have parted to the extent that the gap is now widening, and it's quite clearly, when you look at it, in terms of figures and graphically, it's quite clear now that the there is a differing margin getting wider and wider, which economists tell us is a classic case of manipulation of prices.

 

RICHARDSON

How did the supermarkets do that, given that there is some competition in that sector, some fairly strong competition in fact?

 

MOORE

There is some fairly strong competition, but I'm led to bel ieve that, you know, the four retailers have a monopoly over the percentage of pork buttocks sold in Australia. So at the end of the day the processors are caught between a rock and a hard place as well. They, obviously, have got some degree of control over their cost, by what they pay us, but at the end of the day, basically, the processors in this country are price takers as well' and the importers simply say, well either you pay…. .we'll pay you this price or we'll bring it in, and the point is that in the past, as the price fell, wholesalers dropped their price, processors dropped their price, but the producer could always actually.... at some price could always unload his pigs out the farmgate, and the processor would put those into cold storage, knowing that as the supply and demand curve changed they could draw upon those in the lead-up to Christmas or whatever and onsell them.

 

Never before have we had a situation where processors have simply said' we don't want your pigs, we can't take them' and ther e's no outlet. And the reason for this is, that the buffer of actually being able to put them into the freezer, has gone, because it can simply come over the water from Canada.

 

PRESENTER

A frustrated Graham Moore there of Yarloop piggery, speaking with Al an Richardson and the issue continues in the pork industry.