US relative cost of production

At the 2017 South Australia Pig Industry Day, Dr Roger Cambell recently compared the cost of production between several countries producing pork. His goal was to highlight why Australian producers have to be the best in the world at what they do if they expect to compete with foreign imports, etc.

Rather than cite his reported cost ($AU/kg carcass wt) I converted the numbers to cost relative to his estimated US cost. I don’t know how he accounted for the differences in carcass dressing percentages between countries as some weigh carcasses with head on, some (including the US) weigh with the head off, etc. Even if some of these differences aren’t accounted for in the estimated cost per kg of carcass weight, the differences are dramatic enough that you can easily see the dramatic cost of production advantage the western hemisphere has due to our very large grain production base.

With the US cost of production rated at 100%, Dr Cambell estimated other countries costs to be:
Brazil – 107%
Canada – 113%
Denmark – 131%
Netherlands – 139%
Great Britain – 164%
Australia – 175%

Roger noted that the very high Australian cost was due in part to very high grain prices in 2014/2015 as a result of a poor harvest. While grain prices have declined considerably in Australia due to improved grain production, prices in the western hemisphere have remained low which means the US is still a strong competitor when it comes to world trade in pork and feed grains.

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