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18 December 2002
The New Zealand pork industry is focusing on the development of value-added, differentiated pork products for the highly selective Asian market as a means of countering price competition from Australian producers.
That's one of the findings reported in the Ministry of Agriculture and Forestry's forecasting document - the Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) December 2002 report.
The report says exports of pork for the year ended September 2002 totalled 56.8 tonnes carcass weight equivalent (cwe) - down from 393 tonnes cwe for the previous year. This drop was due to a fall in exports to Singapore when air freighting of chilled whole carcasses could not be sustained against competitive exports from Australia.
The report's author, information analyst Mieke Wensvoort says in response, the New Zealand pork industry has decided to focus on the sea freighting of higher value chilled pork products. This is expected to begin in 2002/03.
The assumption of a slowly appreciating New Zealand dollar is also expected to lower prices of pork imported into New Zealand and Ms Wensvoort says this is expected to act as an added stimulus to the development of niche export markets for our pork.
Exports currently make up only one percent of New Zealand's pork production, but the SONZAF report says this is expected to increase substantially to six percent in 2006.
Looking at the 2001/02 season, pig slaughter numbers increased by two percent over the previous year - up to 708,000.
During this year, pork imports increased 27 percent by volume on the previous year. Imports made up 33 percent of total pig meat consumption in New Zealand in the September 2002 year. In the last ten years, the domestic demand for imported pork has been strong, despite a weak New Zealand dollar keeping imported prices well above the local schedule price throughout this period.
The weighted average schedule price for pig meat increased from $3.29/kg to $3.62/kg during the year - the third consecutive year that prices for all grades of pig meat (pork, bacon and choppers) increased. The report finds one of the factors contributing to the price increases was the weaker New Zealand dollar pushing up the price of imported pork. Another factor was the higher retail prices for beef and sheep meat allowing pork producers to pass on the increases in the price of feed barley
In the outlook from 2002/03 through to 2005/06, the report projects slaughter numbers will continue to rise. Both higher breeding sow numbers and higher average slaughter weights are expected to contribute to an increase in production - inspected pig production is expected to increase at two percent per year out to 2005/06.
"The increase in pork production is expected to be channelled to both the domestic market and the developing export market," Ms Wensvoort says. "Population growth and consumer preferences for white meat are factors contributing to the expected increase in domestic demand for pork."
The report forecasts prices for all grades of pig meat are likely to weaken during the next four years. The weighted average schedule price for pig meat is projected to fall from $3.62/kg, for the year ended September 2002, to $3.40/kg by the September 2006 year.
The structure of the New Zealand pork industry is examined in the report, which outlines significant restructuring in recent years and says further rationalisation is likely. Enterprises engaged in pig farming more than halved between 1994 and 1999 to 267 pig farms. The number of producers registered with the New Zealand Pork Industry Board in 2002 was 375, and the report says the number of producers registered is likely to drop further as less competitive producers leave the industry.
Industry consolidation has also taken place in the processing sector and Ms Wensvoort says further rationalisation and specialisation is expected to improve productivity in the foreseeable future.
Looking to the longer term, the SONZAF pig meat report says the industry may be affected by issues surrounding the coexistence of GM and non-GM production systems. This is because the industry is dependent on domestic and imported grain crops for pig feed. Should New Zealand crops be able to remain GM free, the industry may be able to establish a national pork brand of "raised on GM free grain" and gain a competitive advantage over other pork exporting countries. Whether or not a permanent advantage could be established is dependent on consumer perceptions that may over time become more or less tolerant of GM grain fed pork.
For further information, please contact:
Mieke Wensvoort, Information Analyst, MAF Policy