Evaluating the Export Growth Strategy of the Australian Pork Industry

Small size, dependence on domestic feed-grain and the generic nature of pork would suggest poor export prospects for Australia’s pig and pigmeat industries against leading export countries in North America and Europe. The federal government challenged the industry to do just that when it began opening the domestic pigmeat market to imports in 1990. The 1998 pig industry crisis converted industry and government from protagonists to partners in a concerted export growth strategy. The Federal Government commenced a $24 million Business Grants Program for the Pork Industry, including processing investment incentive grants and assistance to improve competitiveness through alliance formation. Industry formed an Export Marketing Group (EMG), transformed in April, 1999, into a processor alliance, the Confederation of Australian Pork Exporters (CAPE). CAPE quickly defined the industry’s export marketing target to achieve 20 percent of farmed pigmeat production as exports by 2002. After very slow export progress until the late-nineties, ‘lucky breaks’ arising from pig industry disease outbreaks in Asia have led to better export opportunity in Japan and a trade alliance for pork exports to Singapore. From minimal in 1998, Australia now supplies more than 50 percent of Singapore’s fresh pork requirement with Airpork, airfreighted, chilled pork. The paper: Outlines the growth of pork imports and exports in the transition from protected domestic industry to open market, with government assisted restructuring; Presents a value chain analysis of the Australian pork industry, explaining the apparent anomaly of simultaneous growth in pork exports and imports where domestic aggregate pork production and consumption are approximately equal; Provides an explanation for the deviation between assessment of poor prospects and actual export performance. A qualitative evaluation of the growth prospects for pork exports from Australia in both the short-term and the longer-term is presented with consideration of key strengths, including Australia’s favourable environment for minimal-disease pig farming, product differentiation and freight logistics, weaknesses in small size and domestic feed-grain dependence and threats from imports. Recent spectacular pork export success fits comfortably with modern trade theory, where factor endowment, economies of scale and product differentiation are all relevant to explaining intra-industry trade and the development of niche markets.