1. Cooperative Research Centre for an Internationally Competitive Pork Industry Investing in Australia’s industrial, commercial and economic growth Dr Roger Campbell CEO Pork CRC

2. Summary Status of the Pork CRC Board focus – Outcomes for the pork industry Industrial, commercial and economic benefits of the Pork CRC

3. Pork CRC Update Successfully funded November, 2004 Pork CRC launched October 18, 2005 Commonwealth agreement signed and funds available November, 2005

4. Core program areas 1.More reliable and consistent protein and energy supply 2.Herd feed conversion efficiency 3.Functional pork products 4.Education and training

5. Pork CRC evolution… Industry driven

6. Core Participants Supporting Participants Bartlett Grains Pty Ltd WAAPC – Pork Producers Committee Grainsearch Pty Ltd Australasian Pig Science Association Massey University, NZ

7. Very significant end-user involvement… 3 core end-user participants accounting for 30% of production and 47% of exports R&D will be a partnership between end-users (69 FTE’s) and public sector providers (143 FTE’s) Research programmes industry led 2 core participants are peak bodies representing all producers End-users have majority representation on the Board

8. Pork CRC Management Dr Roger Campbell (CEO) Mr Michael Crowley (Finance and Business Manager) Mr Khalil Jamahl (Office Manager) Based at University of Adelaide, Roseworthy Campus

9. Pork CRC Ltd Board Dr John Keniry (Chair) Dr Robert van Barneveld (CHM) Mr Enzo Allara (APL) Mr Rod Hamann (APF) Prof Andris Stelbovics (Murdoch) Prof Shaun McColl (U of Adel.) Mr Angus Davidson (NZPIB) 2 x Specialist Directors

10. Pork CRC Structure Pork CRC Ltd Board Chief Executive Officer  R&D Subcommittee  Audit Committee  Education Subcommittee  Commercialisation Subcommittee Office Manager Finance and Business Manager Project ManagerProgram Leaders Subprogram Leaders Members

11. R&D Sub-Committee Dr Roger Campbell (chair) Dr Rob van Barneveld Dr Rod Hamann Dr Brian Luxford Dr Mike Taverner Professor Frank Dunshea Dr Ian Johnson Mr David Henman

12. Program Managers Program1 – Dr Mike Taverner Program 2 – Professor Frank Dunshea Program 3 -David Henman Program 4 –Dr Ian Johnson

13. Sub-program managers Sub-ProgramManager 1a - GrainsDr Mike Taverner 1b – Enhancing nutrient availability Dr John Black 1c – Alternative ingredientsMr Andrew Philpotts 2a – Measuring Feed intakeDr Bruce Mullan 2b - Manipulating Feed Intake Dr John Pluske 2c - HealthDr Bill Hall 2d - Reproduction/efficiencyMr Rob Smits 2e –GeneticsDr Mark Nottle 4 –EducationDr John Pluske

14. $81.4 million in funding

15. Vision Reduce FEED COSTS; Improve HERD FEED CONVERSION EFFICIENCY, and; Enhance the capacity to COST- EFFECTIVELY produce HEALTHY PORK PRODUCTS targeted at niche markets in Australia and overseas A Cooperative Research Centre to enhance the INTERNATIONAL COMPETITIVENESS of the Australian pork industry by providing and adopting NEW and NOVEL technologies that:

16. Core program areas 1.More reliable and consistent protein and energy supply 2.Herd feed conversion efficiency 3.Functional pork products 4.Education and training

17. Research Investment Process Pork CRC Ltd is a company with clear corporate objectives Not a public sector funding body Outcomes must be achieved – research will be commissioned to achieve these outcomes as efficiently as possible

18. Program Funding ProgramProportional Funding ($ 3.6M) Reducing feed costs. 33% Improving HFC. 45% Functional pork products. 12% Education/Training 10%

19. To reduce feed costs… Dedicated feed grains (barley, triticale) – Local supply – Less variability in price and supply – Enhanced utilisation Greater capacity to measure nutrient content Wider choice of ingredients (legumes, co-products)

20. Subprogram 1a: Innovative grain production Commercial quantities of cereals that can grow closer to pig producing regions, that have a high yield, cost-effective agronomy and acceptable nutritional characteristics for pigs. Commercial quantities of pulses (peas, lupins, beans) that can grow closer to pig producing regions, that have a high yield and cost-effective agronomy.

21. Subprogram 1b: Quality assessment of feed ingredients Adopt, implement, enhance and maintain NIRS calibrations for nutritional quality of cereals developed within the Premium Grains for Livestock Program. A wider range of rapid and objective analytical methods for the nutritional quality of feed ingredients. Processing and interventions to increase nutrient yield from target grains.

22. Subprogram 1c: Wider range of feed ingredients for use in pig diets Identification and development of new and novel protein and energy sources based on co-products and/or traditional sources Assessment of nutritional potential of candidate protein and energy sources Implementation of non-traditional and alternative protein and energy production.

23. Program 1-More and better grains/enhancing nutrient availability More appropriate grains for pigs. Reduce average cost of pig diets by 10%. Measurement and enhancement of nutrient availability Increase DE of grains by 1MJ/kg.

24. To improve herd feed conversion… More control over feed intake Increase metabolic efficiency Improve health status Raise reproductive efficiency Enhance viability of breeding females

25. Subprogram 2a: Innovative products and strategies for the measurement of feed intake. A method for the practical and continuous measurement of feed disappearance in groups (ie a pen of pigs at least daily). A method for practical and continuous measurement of feed wastage within groups. Novel methods for the measurement of individual feed intake within a group. Prediction of disease onset through the application of feed intake measurements.

26. Subprogram 2b: Innovative products and strategies for the manipulation of feed intake. Novel molecules (eg. cytokines) and feed ingredients (eg. grains, inherent plant compounds, plant extracts) that can be used to manipulate feed intake. Elimination of post-weaning growth check and promotion of gut development through stimulation of feed intake. Improved carcase quality through manipulation of feed intake in growing pigs.

27. Subprogram 2c: Alternative therapies, products or strategies to improve pig production efficiency and reduce mortality of all growth phases. Nutritional, genetic, immunological and management solutions for the control and/or reduction of disease and mortality as an adjunct or alternative to existing medication programs in all growth phases. Development of nutritional strategies and further enhancement of metabolic modifiers and their mode of application (eg. Paylean, pST) to improve lean tissue deposition. Implement novel genetic and reproductive tools and technologies to enhance production efficiency.

28. Subprogram 2d: Extend and enhance the productive life of the breeding female through novel management and system design. Nutritional, genetic and management strategies to improve the productive capacity of the gilt over her lifetime. Intervention strategies to reduce seasonal infertility. Practical system for the prediction of the time of ovulation.

29. Program-2 Improving HFC Sub-programsTarget for HFC Health Growth enhancement GeneticsReduce from 4.2 to 3.6 Reproduction Measure/manipulate feed intake Nutrition/management Other ?

30. Program 3 –Improved market outcomes OutcomesTargets Increased domestic consumption. Increase by 10% Increased export of innovative products Increase exports by 10% Higher prices (demand) for pork products Increase price by $1.0/kg.

31. The Bottom Line Reduce COP from $2.05 to $ 1.50 per kg carcass weight.

32. Relative business indicators Business indicator USACanadaBrazilAustralia COP (A$/kg) 1.48 1.55 1.10 2.20 HFC- CW 3.68 3.80 3.75 4.20 Carcass Wt./sow/ yr (kg) 1700 1650 1550 1450 Feed ($/tonne) 200 210 220 270

33. Comparative costs in USA dollars per kg carcass weight CountryUSACanadaBrazilAustrali a COP $/kg 1.25 1.481.00 1.63 Exchang e rate 1.0 0.87 0.33 0.73

34. HFC Currently averages 4.2 on a carcass weight basis for Australia (APL Pig check 2004). USA average closer to 3.7 Rather scary when feed costs 27 cents/kg.

35. Causes? Genetics? Wastage? Low energy diets? Light selling weights? Reproduction Poor health Tell me?

36. Shorter term technical targets and changes for Australia and their potential impacts.

37. Potential improvement in profit and flexibility Current Targets Price ($/kg) 2.4 HFC (Carcass) 4.2 3.6 Feed ($/kg).27.25 Total feed($/kg) 1.13.90 Other ($/kg) 0.95.82 COP ($/kg cwt) 2.20 1.72 Pigs /sow/yr 19 22 Weight (kg) 75 76 Profit/sow ($/yr) 285 1140

38. My R&D priorities for the Australian Industry (all linked with training/education) PriorityOutcomes ReproductionKPI=wt/sow/year and/or simplify the process (remove the human). GrainsMore feed grains,identify variation in nutrient availability and enhance nutrient availability. NutritionQuantify effects of fibre and fat on performance. Lower cost higher income. GeneticsMuch more efficient pigs and high reproductive (weaning) capacity. Health/growth manipulationHealth improvement within current systems and enhanced performance. Feed IntakeAbility to measure/predict and manipulate.

39. Programs/outcomes continued PriorityOutcomes Functional Pork Products Products with scientifically supported benefits for humans.Increased national and global demand.

40. Chances of success CategoryChances of success ReproductionLow ? without different approaches Grains and nutrient availabilityHigh if coordinated properly. NutritionHigh GeneticsQuestionable based on history but definitely a more global solution to constraints Health/Growth manipulationLow based on history/high Feed IntakeMedium to high Functional foodsMedium

41. Board Focus – Industry Outcomes

42. Industry goals… Grow exports Grow domestic demand Build human capital Be profitable Be sustainable

43. Industry challenges… Fluctuating exchange rates Imports International competition Cost of production

44. Exchange rates and GVP… (Source: ABARE)

45. Imports as % of Australian pork consumption 5.0 % 17.2 % 19.7 % 24.2 % ($219 m)

46. JAPAN KOREA HONG KONG CHINA SINGAPORE Australian share of total pork imports… COMBINED TOTAL (2003) TOTAL IMPORTS 1,735,225 t AUSTRALIAN PORK = 3.5% TOTAL VALUE $A182 million PHILLIPINES

47. Cost of production (2002)… (Source: “Whole Hog”)

48. Factors influencing profitability… (Source: Pigstats 2003)

49. Australian pig meat exports (Source: ABS)

50. Facts When cost of production is high, our capacity to export is low When cost of production is high, our capacity to compete with imports on the domestic market is diminished Cost of production is primarily influenced by feed costs and efficiency of feed use

51. Pigs are what they eat… Healthy inputs = healthy outputs Delivery of functional nutrients (selenium, omega-3, iron) Health benefits through consumption – Domestic demand (volume) – Export demand (volume) – Value of product (revenue)

52. Opportunities… Cost-effective production of high quality, nutritious pork Additional health benefits arising from the consumption of pork through incorporation of functional nutrients Increased consumption of pork relative to other meats

53. Performance indicators… Reduction in on-farm cost of production from $2.05/kg carcase to $1.50/kg carcase (2004 currency values) Capture of new niche markets for value added pork products by 2012

54. Can we get there?… Program 1a,b,c $10/kg feed = $0.04/kg carcase 0.1 feed conversion = $0.04/kg carcase Local supply ($0.12), more accurate diet formulation ($0.04), greater energy yield ($0.08), alternative ingredients ($0.12) Program 2 a,b Reduced feed wastage ($0.06), strategic medication($0.04), better summer growth ($0.05), reduced autumn fat ($0.03), reduced weaning growth check ($0.05) Program 2 c,d Reduced medication costs ($0.02), improved growth and feed conversion ($0.15), increased lifetime productivity ($0.07), reduced seasonal infertility ($0.05), measurement of ovulation time ($0.03) $0.36 $0.22 $0.32

55. QAF - Realisation of outcomes… 50% increase in production 500% increase in Japanese exports 10% reduction in imports 500 extra regional jobs

56. Industrial, Commercial and Economic Benefits of the Pork CRC

57. Industrial Increased exports Increased domestic supply Reduced impact from drought, exchange rate fluctuations and imports Industry expansion Job creation Improved return on existing investment Strengthened rural sector

58. Comparative growth…

59. Growth potential of key Asian pork markets (2004-2012) CountryPredicted increase in net imports (tonnes) % Change Japan173,00015 China406,000222 Philippines107,000357 Australia’s 2003 exports = 62,000t worth $221m (FAPRI, 2003)

60. Commercial Product/process focussed R&D programme High commercial relevance Applications extend beyond the pork industry – Plant varieties – Measurement of ovulation – Measurement of feed intake – Delivery of functional nutrients

61. Economic Conservative estimate of economic benefit – $AUD235 million per annum Additional economic benefits: – Grains industry – Other livestock industries – Commercialisation of products – Health/nutrition sectors

62. Key strengths… Most consumed meat in the world Capacity for growth Bid based on industry need Cohesive industry Competitors collaborating Contributes to three national research priorities Component of industry restructure plan Significant investment in the CRC ($11.2 million) at a time of poor returns

63. Conclusions Pork CRC operational and ready to deliver Strong support from government and industry Outcomes will have a significant impact on the competitiveness of the Australian pork industry

64. Supporting Information (if required)

65. Core participants Australian Pork Farms Group ($50k/$100k) Australian Pork Ltd ($750k/$88k) QAF Meat Industries Pty Ltd ($70k/$2m) The CHM Alliance ($50k/$300k) NZ Pork Industry Board ($50k/$100k) Murdoch University ($50k/$400k) University of Adelaide ($100k/$450k) University of Sydney ($200k/$1m)

66. Supporting participants NSW Agriculture DPI Victoria Agriculture WA QDPI SARDI Alltech Biotechnology Pty Ltd Feedworks Pty Ltd GRDC Bartlett Grains Pty Ltd WA APC Pork Producers Committee Grainsearch Pty Ltd Elanco Animal Health Pty Ltd Ridley Agriproducts Pty Ltd APSA University of Queensland Betterblend Stockfeeds Pty Ltd Kemin Industries (Asia) Pte Ltd.

67. Program 3 : Implement nutritional and genetic strategies to produce pork and pork products with functional food properties. Fresh pork products ready for retail with specific human health benefit properties. Omega 3, CLA, Selenium Discovery within raw materials. Genetic strategy to change fatty acids. Value added pork products with increased functionality benefits Asian-style functionality benefits Incorporation of well-recognised or demonstrated functional food ingredients Assessment of pork and pork products for functionality using accepted models.

68. Program 4: Capacity Building Training of PhD students Honour’s/summer scholarship programs/course work programs Short courses Post-doctoral programs Technology transfer via existing APL channels and APSA