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News 144 views last update:6 Aug 2012

High feed costs hit Aussie pig producers

Australian pigmeat producers are suffering badly because of high domestic feed costs, the Productivity Commission has found. The commission's final report into the pigmeat industry found feed prices reached record highs in 2007 and the trend is continuing into this year.

Major reasons for feed price hikes have been drought, growing worldwide demand and government support for ethanol, and the strong economic growth in China and India.

While pointing out that the Cooperative Research Centre for Pork is looking into ways to reduce feed costs, the report recommended a review into ethanol and other biofuel policies and their effect on grain users.

It found federal government support for the ethanol industry, based on growing crops such as wheat and sugar, had the potential to increase feed grain costs. The commission also found there was potential, in the longer term, for domestic support for the ethanol industry to raise domestic feed prices and therefore directly affect the pigmeat and other livestock industries.

The report said reducing feed costs was crucial for Australia to be able to participate in an export market.

Among other recommendations, the commission urged governments to undertake periodic reviews of pig animal welfare regulation to ensure that it was imposing the minimum compliance requirements necessary to achieve its objectives. It urged consistency of regulation across the various jurisdictions on elements such as animal welfare, occupational health and safety, food and ethanol regulation.

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