The Australian Pig Industry Crisis – An Unexceptional Circumstance!

The collapse in Australian pig prices during 1997/98 to their lowest levels in three decades triggered the third industry economic crisis for the nineties, appeals for government assistance and relief from pigmeat import competition. Two national inquiries were instigated in 1998: a Rural Adjustment Scheme Advisory Council (RASAC) Exceptional Circumstances inquiry and later, a Productivity Commission (PC) inquiry, “Pig and Pigmeat Industries: Safeguard Action Against Imports”. The PC inquiry also examined factors affecting the competitiveness of the Australian pig and pigmeat industries. RASAC concluded that the pig industry crisis did not fit the criteria for ‘exceptional circumstances’ assistance. The Federal Government response has included: the National Pig Industry Development Program (NPIDP) to help adjust the industry to an export focus and the Pigmeat Processing Grants (PPG) program for upgrading pig abattoirs to export standard. Economic studies to benchmark the production and processing industries are proceeding and an Export Marketing Council has been formed to facilitate export trade. Funding for pig farmer training under the FarmBis program was also promised. A 1992 inquiry by the Australian Customs Service into dumping and subsidisation of Canadian pork found no injury from imports and a 1995 Industry Commission inquiry, Pigs and Pigmeat, found little influence of imported pigmeat on domestic pig prices. The 1998 PC inquiry, which reported in November, 1998, is of particular interest because it is a precedent ‘safeguard action against imports’ inquiry by Australia under World Trade Organisation (WTO) rules. This paper reviews the 1998 pig industry crisis, outcomes of the 1998 inquiries and the industry/government export marketing strategy. In a trading environment where imports from Canada have been progressively relieved of sanitary/phytosanitary quarantine controls the Australian pigmeat industry faces challenges to become competitive in the international market. Exposure to the world market has increased price volatility, with the recent crisis clearly signalling danger and the need for change. In that sense the Australian pig industry is joining the situation of other primary industries participating in international markets without protection. The circumstance is neither unique nor exceptional.