While Australian pigmeat producers are feeling pressure from substantially higher feed costs, in the Productivity Commission’s assessment these circumstances do not meet the WTO criteria for safeguards action. The WTO Safeguards Agreement requires evidence that significant increases in imports have caused serious injury to the local industry. However, although imports have been increasing in recent years, the Productivity Commission found that they had broadly met increases in consumer demand, without driving down local producer prices. A sharp fall in industry profitability in the second half of 2007 was caused by an unprecedented increase in feed grain costs, which increased production costs by 40-50 cents per kilo of pigmeat. This rise added to substantial increases in feed grain prices in 2006. Without these higher feed prices, producers would have remained profitable over 2007.
