request for proposal: industry economic impact report (apl...

Request for Proposal: Industry Economic Impact Report

(APL RFP: 2016/201)

Closing 5pm AEST 31 January 2017

APL RFP: 2016/201

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TABLE OF CONTENTS 1 OVERVIEW .................................................................................................................................... 2

1.1 INVITATION TO RESPOND TO THIS REQUEST FOR PROPOSAL (RFP) ........................................................... 2 1.2 RFP TIMETABLE ....................................................................................................................................... 2 1.3 CONTACT OFFICER ................................................................................................................................. 3 1.4 ENQUIRIES BY RESPONDENTS ................................................................................................................... 3

2 BACKGROUND ............................................................................................................................ 4

2.1 AUSTRALIAN PORK LTD ........................................................................................................................... 4

3 CONDITIONS OF RFP ................................................................................................................. 5

3.1 INVITATION ............................................................................................................................................ 5 3.2 INTERPRETATION ..................................................................................................................................... 5 3.3 LANGUAGE, MEASUREMENT AND CURRENCY ........................................................................................... 5 3.4 APPLICABLE LAW ..................................................................................................................................... 5 3.5 APL POLICY ............................................................................................................................................ 5 3.6 INSURANCE ............................................................................................................................................. 6 3.7 RESPONSIBILITY FOR RFP COSTS .............................................................................................................. 6 3.8 RESPONDENTS TO INFORM THEMSELVES ................................................................................................... 6 3.9 ADDENDA............................................................................................................................................... 6 3.10 RFP LODGEMENT .................................................................................................................................... 7 3.11 PRICING AND PAYMENT ........................................................................................................................... 7 3.12 ACCEPTANCE .......................................................................................................................................... 8 3.13 PROPOSAL VALIDITY PERIOD .................................................................................................................... 8 3.14 UNINTENTIONAL ERRORS OF FORM ......................................................................................................... 8 3.15 OWNERSHIP OF PROPOSAL DOCUMENTS ................................................................................................. 8 3.16 CONFIDENTIAL INFORMATION ................................................................................................................. 9 3.17 SECURITY, PROBITY AND FINANCIAL CHECKS ........................................................................................... 9 3.18 CONFLICT OF INTEREST ........................................................................................................................... 9 3.19 UNLAWFUL INDUCEMENTS AND COLLUSIVE PROPOSALS ......................................................................... 10 3.20 IMPROPER ASSISTANCE AND FALSE OR MISLEADING CLAIMS .................................................................... 10 3.21 TERMINATION OF RFP PROCESS ............................................................................................................. 10 3.22 OTHER APL RIGHTS .............................................................................................................................. 10

4 PROPOSAL EVALUATION ....................................................................................................... 11

4.1 EVALUATION OBJECTIVE ........................................................................................................................ 11 4.2 EVALUATION STAGES ............................................................................................................................. 11 4.3 EVALUATION METHODOLOGY ............................................................................................................... 11 4.4 EVALUATION CRITERIA .......................................................................................................................... 11 4.5 DEBRIEFING ........................................................................................................................................... 12

5 REQUIRED INFORMATION ...................................................................................................... 13

5.1 PROVISION OF ALL INFORMATION .......................................................................................................... 13 5.2 SCHEDULE 1: STATEMENT OF REQUIREMENTS ......................................................................................... 13 5.3 SCHEDULE 2: RESPONDENTS’ PROFILE .................................................................................................... 13 5.4 SCHEDULE 3: PRICING............................................................................................................................ 13 5.5 SCHEDULE 4: STATEMENT OF COMPLIANCE ............................................................................................ 13 5.6 SCHEDULE 5: CONFIDENTIALITY DEED .................................................................................................. 13

SCHEDULE 1 – STATEMENT OF REQUIREMENTS ...................................................................... 14

S1.1 INTRODUCTION .................................................................................................................................... 14 S1.2 SUB-CONTRACTING .............................................................................................................................. 14 S1.3 PROPOSED SCHEDULE ............................................................................................................................ 14

SCHEDULE 2 – RESPONDENTS’ PROFILE .................................................................................... 15

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Respondents’ Details ...................................................................................................................................... 15 Conditions of Participation............................................................................................................................... 16 Related Body Corporate .................................................................................................................................. 17 Subcontractors ............................................................................................................................................... 17 Evidence of Financial Viability and Capability.................................................................................................... 17 Insurance ....................................................................................................................................................... 18 Conflict of Interest .......................................................................................................................................... 18 Capability and Experience ............................................................................................................................... 18 Referees ........................................................................................................................................................ 18

SCHEDULE 3 – PRICING ................................................................................................................... 20

SCHEDULE 4 – STATEMENT OF COMPLIANCE .......................................................................... 21

SCHEDULE 5 – CONFIDENTIALITY DEED.................................................................................... 23

EXECUTED as a Deed ................................................................................................................................... 25 --- End --- ....................................................................................................................................................... 26

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1 OV ERV IE W

1.1 Invitation to Respond to this Request for Proposal (RFP)

Australian Pork Limited (APL) invites suitably qualified consultancy firms (Respondents) to respond to

this Request for Proposal (RFP) for the provision of:

A report on the economic impacts of the Australian pork industry. This project will update and build on

APL’s previous report: Economic Impact Report, Pig production and meat processing in Australia 2010-11

(Appendix A). It will be used to underpin APL advocacy positions in relation to the importance of the

pork industry, and its contribution to agriculture and the broader Australian economy.

Project Overview

APL previously commissioned a report Economic Impact Report, Pig production and meat processing in

Australia 2010-11, which provided an economic impact analysis of pig production and pig meat

processing and its contribution to the Australian economy. This report was finalised in August 2012.

As the representative body for Australian pig producers, APL requires relevant and contemporary

information on the economic impacts of the industry in order to make informed decisions and develop

sound policy positions on behalf of pork producers. To this end, APL is commissioning an update and

expansion of the 2010-11 industry economic impact report.

The report should:

incorporate updates to all statistics and figures appearing in the 2010-11 report

consider the broader flow-on economic, and social, effects for a community from a piggery

development, including potential ‘multiplier effects’, using case studies if available

In addition to the economic impact of imports, include an overview of the economic impact of

exports, potential for export growth, export demand and readiness. The report should cover

the potential for long-term industry growth stemming from expanded Asian trade

include an easily understandable infographic to highlight the main findings, including a state-by-

state breakdown of key industry statistics

The Australian pork industry export profile will be critical as the pork industry looks to expand into

new markets following the signing of new free trade agreements (FTAs). APL is particularly interested in

FTAs recently concluded with the northeast Asian economies (China, Japan, and South Korea).

The report will demonstrate the ability and relevance of the pork industry, and assist the industry to

gain the backing of the Australian Government in facilitating access to these markets. The information

obtained through this updated report will underpin much of the advocacy required to gain this support.

Commencement date: 1 March 2017.

Completion and final report delivered by 30 June 2017.

1.2 RFP Timetable

Key activities and proposed target completion dates for the RFP process are set out in the table below.

Milestone Proposed Date

Issue of RFP 20 December 2016

Closing Time of RFP 5pm 31 January 2017

Evaluation of RFP’s completed 17 February 2017

Notification to Preferred Consultancy Firm 20 February 2017

Contract Signed 27 February 2017

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Commencement date 1 March 2017

Progress report and review 1 May 2017

Final report delivered for APL review 30 June 2017

APL may change the dates in the table above at its absolute discretion and will use its best endeavours

to provide notification to Respondents.

1.3 Contact Officer

The Contact Officer for this procurement is:

Mr Andrew Robertson

Policy Analyst

Australian Pork Limited

Email: [email protected]

Completed proposals should be addressed to Andrew Robertson at:

[email protected].

1.4 Enquiries by Respondents

Respondents may seek clarification of the meaning of this RFP only from the Contact Officer defined in

Clause 1.5 of this document.

All enquiries in relation to this RFP must be in writing, by email and addressed to Andrew Robertson at

[email protected].

Official responses to enquiries by Respondents will only be issued by the Contact Officer or nominated

alternative.

APL will circulate questions and their answers to all Respondents without disclosing the source of the

questions, or revealing any confidential Respondent information.

APL will cease answering enquiries related to this RFP at 5pm AEST, 5pm 31 January 2017.

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2 BACK GROU ND

2.1 Australian Pork Ltd

Australian Pork Limited (APL) is the peak national representative body for Australian pig producers. It

is a producer-owned not-for-profit company combining marketing, export development, research and

innovation and strategic policy development to assist in securing a profitable and sustainable future for

the Australian pork industry.

The Australian pork industry employs more than 20,000 people in Australia and contributes $2.8 billion

in gross domestic product to the Australian economy. The pork industry contributes approximately

2.13% of total Australian farm production with roughly 1500 pig producers producing around 4.7

million pigs annually.

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3 COND IT IONS O F RFP

3.1 Invitation

Australian Pork Limited (APL) invites suitable consultancy firms (Respondents) to respond to this

Request for Proposal (RFP) for the provision of:

A report on the economic impacts of the Australian pork industry. This project will be used to assess

the impact of government regulations, disease and quarantine initiatives, infrastructure, and

competition policies in Australia.

The responses to this RFP must meet the Statement of Requirements at Schedule 1.

Any responses that are not submitted according to the requirements in this RFP may be excluded

from consideration.

This RFP is expressly not a contract between APL and the Respondent. Nothing in this RFP or in any

response is to be construed as to give rise to any contractual obligations, expressed or implied.

APL may stop the RFP process, or re-start the RFP, at any time if it considers that it is in its interest to

do so.

APL may amend this RFP, including extending the RFP Closing Time, by giving written notice. Any

extension notice or other variation or amendment will be given the same distribution as the original

RFP.

3.2 Interpretation

Throughout this RFP, unless the contrary intention appears:

1. words in the singular will include the plural and the plural include the singular;

2. words importing persons will include any company, trust, partnership, joint venture,

association, corporation, body corporate or governmental agency; and

3. a reference to any law or legislative provision includes any statutory modification, amendment

or re-enactment, or any subordinate legislation or regulations issued under that legislation or

legislative provision.

3.3 Language, Measurement and Currency

Respondent proposals, including all attachments and supporting material, must be written in English,

and unless otherwise specified, measurement must be expressed in Australian legal units of measure.

Any prices quoted in Respondent proposals must be in Australian dollars excluding GST.

3.4 Applicable Law

The laws of the Australian Capital Territory apply to this RFP process.

3.5 APL Policy

3.5.1 Privacy

APL is obliged to protect personal information in accordance with the Information Privacy Principles in

the Privacy Act 1988 (Privacy Act).

APL reserves the right at any time not to disclose any information that is subject to, or that APL

reasonably believes could be subject to, protection under the Privacy Act.

Respondents must comply with applicable obligations under the National Privacy Principles in the

Privacy Act.

If APL discloses any personal information to Respondents, they must also comply with the obligations

under the Privacy Act, to which APL is subject, in relation to that information.

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3.5.2 Workplace Relations

All Respondents will be required to comply with the relevant provisions of applicable legislative

requirements, awards and workplace arrangements, including without limitation:

workplace/industrial relations legislation;

occupational health and safety legislation;

workers compensation legislation, and;

affirmative action legislation.

3.5.3 Equal Employment Opportunity for Women

Respondents should comply with their obligations under the Equal Employment Opportunity for

Women in the Workplace Act 1999 and should not enter into any subcontracting arrangements with a

subcontractor named by the Director of Affirmative Action as an employer currently not complying

with the Act.

3.6 Insurance

The preferred Respondent will be required to have in place insurance arrangements appropriate to

provision of the requirement in this RFP, including (without limitation) professional indemnity

insurance, public liability insurance, property damage insurance, product liability insurance and workers

compensation insurance.

3.7 Responsibility for RFP Costs

Participation in any stage of the RFP process or in relation to any matter concerning the RFP is at the

Respondent’s sole risk, cost and expense.

APL will not be responsible in any circumstance for any costs or expenses whatsoever incurred by any

Respondent (or proposed Sub-contractor) in preparing or lodging a proposal or in taking part in the

RFP process or in taking any action related to the RFP process.

3.8 Respondents to Inform Themselves

Respondents are considered to have:

a. examined the RFP and any documents referred to in the RFP and any other information made

available in writing by APL to Respondents for the purpose of preparing their proposal;

b. examined all further information which is obtainable by the making of reasonable enquiries

relevant to the risks, contingencies and other circumstances having an effect on their proposal;

c. made all investigations, interpretations and conclusions in relation to APL as necessary or

desirable in preparing their proposal; and

d. satisfied themselves as to the correctness and sufficiency of their proposal including prices.

Respondents acknowledge that, except where expressly provided for in this RFP, the Respondent does

not rely on:

e. any statement, letter, document or arrangement whether oral or in writing or other conduct;

or

f. any warranty or representation made by or on behalf of APL, as adding to or amending this RFP.

3.9 Addenda

APL may in its absolute discretion, issue addenda to the RFP. All conditions of the RFP will apply to

addenda unless amended in the addenda.

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Addenda to this RFP may be issued for the purpose of clarifying or amending the RFP. If any addendum

is issued any necessary modifications to the Schedules of the RFP will also be made.

Respondents in doubt as to the true meaning of any part of the RFP must notify the Contact Officer

and request clarification. Any binding interpretation will be issued as an addendum.

All addenda issued will become part of the RFP. Respondents must respond to the RFP as amended by

any addenda.

3.10 RFP Lodgement

Proposals must be lodged by 5pm 31 January 2017 via email to the Contact Officer at Clause 1.5.

Lodgement of a proposal on time is entirely the responsibility of the Respondent.

Failure to comply with the RFP Closing Time may lead to the Respondent not being considered by APL.

The judgment of APL as to the actual time that a proposal is lodged is final.

APL reserves the right, at its sole discretion, to admit or exclude any late proposal, or parts thereof,

submitted after the RFP Closing Time.

3.10.1 RFP Electronic File Types

The Respondent must lodge their proposal in the following file types:

a. Documents in Microsoft Word for Windows (Version 2013 or higher);

b. Spread sheets in Microsoft Excel for Windows (Version 2013 or higher);

c. Graphics in Microsoft PowerPoint for Windows (Version 2013 or higher); and

d. Any other documentation in PDF.

Lodgement of proposals in any other file type will not be accepted.

3.10.2 Virus Checking

In submitting a proposal electronically, the Respondent warrants that they have taken reasonable steps

to ensure that proposal files are free of viruses, worms or other disabling features which may affect

APL’s computing environment.

Proposals found to contain viruses, worms or other disabling features will be excluded from the

evaluation process.

3.10.3 Proof of Lodgement

When a proposal has been successfully received, APL will provide a separate email confirming receipt

of the proposal to the email address of the sender of the proposal.

3.11 Pricing and Payment

3.11.1 Complete Pricing and Payment

Respondents must complete the Pricing Schedule 3 for the consultancy services specified in the

Statement of Requirements Schedule 1.

Prices submitted by Respondents are to include all costs excluding GST associated with providing the

consultancy services for the production of the industry economic impact report.

Payment made by APL to Respondents will be made in three tranches upon completion of the following

milestones:

1. Contract signature

2. Mid-report progress review

3. Final report delivered and approved by APL

Payments will be made on receipt of a valid tax invoice.

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3.11.2 No Alteration of Proposal Prices

The proposed prices must be fixed for the RFP Validity Period.

3.11.3 Compliance Costs

Proposal prices are to include all costs of complying with the terms and conditions of this RFP, whether

applying to the RFP process or to the performance of any agreement.

3.11.4 Taxes and Charges

Respondents must pay all applicable overseas and Australian (Federal, State and Local Government) taxes

and charges including any goods and services tax, consumption tax or any other form of indirect tax

applicable to the performance of each contract.

Proposal prices must be submitted on a GST exclusive basis, with the applicable GST separately identified

in Pricing Schedule 3.

3.11.5 Mode of Payment

RFP prices must not vary according to the mode of payment proposed.

3.12 Acceptance

3.12.1 Acceptance of Proposal

Neither the lowest priced proposal, nor any proposal, will necessarily be accepted by APL.

3.12.2 Whole or Part Proposal

APL will not accept a part response to this RFP.

3.12.3 No Legal Rights or Obligations

No legal rights or obligations or contract in relation to the performance of the services detailed in the

Statement of Requirements Schedule 1 will arise between APL and any Respondent prior to the execution

of a contract. This clause does not apply to the Confidentiality Deed.

3.12.4 Acceptance of Conditions of RFP

Lodgement of a proposal indicates the Respondents acceptance of the Conditions of the RFP.

3.13 Proposal Validity Period

Proposals will remain valid and open for acceptance by APL for six (6) months from the RFP Closing

Time.

3.14 Unintentional Errors of Form

If APL considers that there are unintentional errors of form in a proposal, APL may request the

Respondent to correct or clarify the error, but will not permit any material alteration or addition to the

proposal.

Where APL considers that such corrections would introduce unfairness into the evaluation process, the

corrections will not be admitted for evaluation.

3.15 Ownership of Proposal Documents

All proposal documents will become the property of APL. Ownership of the intellectual property in the

proposals will however remain unchanged. APL will treat information provided in the proposal as

Commercial-in-Confidence.

Intellectual property rights in the proposal do not pass to APL with the lodgement of the proposal. The

Respondent grants APL a licence to retain, use, disclose and copy the information contained in any

proposal document for the purposes of:

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a. evaluating or clarifying the proposal;

b. evaluating any subsequent proposal;

c. negotiating any resultant contract;

d. managing a contract with the successful Respondent, if any;

e. referring any material that suggests collusion by Respondents to the Australian Competition and

Consumer Commission (“ACCC”) and the use by the ACCC of the material to conduct any

review or investigation it deems necessary;

f. responding to any challenge to the RFP process, audit or legal compliance activities and complying

with APL reporting requirements, and;

g. any other purpose related to the RFP process or above purposes.

3.16 Confidential Information

All Respondents must, before having access to any information provided by APL, or any of its advisors,

in relation to this RFP process, have a senior representative of the Respondents organisation sign the

Confidentiality Deed Schedule 6.

APL undertakes to keep confidential any Confidential Information provided to APL by Respondents

prior to awarding the contract and, in respect of unsuccessful Respondents, after contract award.

To enable APL to consider whether it agrees to keep specific information confidential Respondents

must include in their proposal any request that information is to be treated as confidential following the

award of a contract to it, specifying the information and giving reasons why it is necessary to keep the

information confidential.

APL will consider any request and will inform the Respondent whether or not APL, in its sole

discretion, agrees to the request and the terms under which it agrees. The terms of any agreement will

form part of any contract awarded.

3.17 Security, Probity and Financial Checks

APL reserves the right to perform security, probity or financial (including credit) checks in relation to

the Respondent, its partners, subcontractors, associates, or related entities. These checks may require

individuals to sign forms verifying information relating to that individual and/or authorising the provision

of confidential or personal information.

Respondents must provide, at their own cost, all reasonable assistance required by APL in undertaking

and conducting the security, probity and financial checks.

3.18 Conflict of Interest

Respondents must state any circumstances or relationships which constitute, or may be perceived to

be a conflict with the interests of APL in connection with this RFP or the provision of the services

detailed in Statement of Requirements at Schedule 1.

A conflict of interest may exist if the Respondent:

or any of its personnel have a relationship (whether professional, commercial or personal) with

APL personnel involved in the evaluation of RFP’s; or

has a relationship with, and obligations to, an organisation which would affect the performance

of the Contract or would bring disrepute to or embarrass APL.

Respondents must identify all actual or potential conflicts of interest that may arise at any time prior to

entering into a Contract or in the provision of Services under any Contract arising from the RFP

process and immediately notify APL in writing.

Upon notification of an actual or potential conflict of interest APL may:

a. enter into discussions to seek to resolve the conflict of interest;

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b. exclude the Respondent from further consideration (including terminating contract

negotiations); or

c. take any other action which it considers appropriate.

3.19 Unlawful Inducements and Collusive Proposals

Respondents and their respective officers, employees, agents or advisers must not have violated any

applicable laws regarding the offering of unlawful inducements in connection with the preparation of

their proposal.

Respondents and their respective officers, employees, agents or advisers must not engage in any

collusive activity, anti-competitive conduct or any other similar conduct with any other Respondent or

person in relation to the preparation or lodgement of their proposal.

3.20 Improper Assistance and False or Misleading Claims

Respondent’s proposals, which in the opinion of APL, have been compiled with the improper assistance

of employees of APL, ex-employees of APL, and/or contractors or ex-contractors of APL, or with the

utilisation of information unlawfully obtained from APL, will be excluded from further consideration.

If a Respondent is found to have made a false or misleading claim or statement, that Respondent’s

proposal may be excluded from further consideration.

3.21 Termination of RFP Process

APL reserves the right in its absolute discretion to suspend, terminate or abandon, in whole or in part,

the RFP process at any time. APL will notify Respondents to this effect but is not obliged to provide any

reasons.

Respondents will have no claim against APL or its respective officers, employees or advisers with

respect to the exercise of, or failure to exercise, such right.

3.22 Other APL Rights

Notwithstanding any other provision of this RFP, APL reserves the right, at any time to:

a. alter, amend or vary this RFP and the process outlined in this RFP;

b. suspend or terminate this RFP process or any part of it;

c. require additional information or clarification from any Respondent or anyone else, or provide

additional information or clarification to any Respondent or anyone else;

d. negotiate or not negotiate with any one or more Respondents, without corresponding with any

other Respondent and discontinue negotiations at any time;

e. allow, or not allow, the successful Respondent to enter into the proposed contract in the name

of a different legal entity from that which provided a response to this RFP;

f. add to, alter, delete or exclude any of the requirement to be provided by the preferred

Respondent under this RFP; and

g. alter, amend or vary the terms of a Draft Contract released by APL at any time, including

without limitation during negotiations.

For the avoidance of doubt, APL may exercise its rights under this clause and elsewhere in this RFP at

any time and in its absolute discretion, unless this RFP expressly provides otherwise.

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4 PRO PO SAL EVALUAT IO N

4.1 Evaluation Objective

APL will assess proposals to identify the process which best meets the project objective, deliverables,

technical expertise and value for money.

4.2 Evaluation Stages

The evaluation will be undertaken in 3 stages consisting of the following:

1. Registration and Initial Screening.

2. Evaluation of respondents.

3. Selection of consultancy firm.

4.2.1 Stage One – Registration and Initial Screening

Proposals received by the RFP Closing Time and Date will be registered and screened for compliance

with the Conditions of RFP in Section 3.

4.2.2 Stage Two – Evaluation of Respondents

All Respondents’ proposals will be evaluated against the same evaluation criteria and will be rated by

consultancy expertise, proposed price and ability to deliver the required report.

On completion of the initial evaluation APL may, at its discretion, request selected Respondents to

make a presentation to APL in respect of their RFP and other relevant selection criteria.

Respondents not selected for further consideration shall be advised by APL as soon as practicable.

4.2.3 Stage Three – Selection of Consultancy Firm

During this stage, APL shall, at its absolute discretion, make contact with Respondent referees, either by

phone or in person, to assist in the evaluation.

APL shall, at its absolute discretion, make a recommendation concerning the preferred proposal which,

in its opinion, meet the requirements to the greatest degree.

APL will contact the successful consultancy firm in writing.

4.3 Evaluation Methodology

The proposal evaluation process may, at the absolute discretion of APL, involve:

1. Discussions with some or all Respondents to provide written clarification of various aspects of

their proposals; or

2. Discussions with clients of some or all Respondents listed as referees in the Respondents’

proposal.

APL may make independent enquiries about any of the matters that may be relevant to the evaluation of

any proposal.

4.4 Evaluation Criteria

The evaluation criteria are listed below and are divided into:

1. Mandatory (Pass/Fail) Criteria; and

2. Comparative Assessment Criteria.

4.4.1 Mandatory Criteria

APL will exclude a proposal from further consideration if APL, at its absolute discretion, considers that

the proposal does not pass the mandatory criteria. For the purposes of this RFP, APL has defined as

mandatory criteria the:

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1. Conditions of RFP in Section 3 of this RFP, and

2. Provision of Required Information in Section 5 of this RFP.

4.4.2 Comparative Assessment Criteria

Respondents should note that the evaluation criteria are not listed in order of importance.

1. Methodology Criteria: The degree to which a Respondent proposes to gather market intelligence

and information for the industry economic impact report to meet the Statement of Requirements

Schedule 1.

2. Pricing Criteria: The whole of life cost to APL of the proposal, determined by APL, from the

proposal. APL may normalise prices in proposals to form a basis for comparison between

proposals.

3. Corporate/Risk Criteria: The Respondents corporate and financial capability to deliver the

industry economic impact report and any risks identified in the proposal.

4.5 Debriefing

Unsuccessful Respondents may, after they have been notified in writing that they have been unsuccessful,

request a debriefing from APL representative(s). APL may, at its absolute discretion, provide a debriefing

to the Respondent at such time and in such manner as APL considers appropriate.

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5 REQU IR ED INFOR MAT ION

5.1 Provision of all Information

Respondents must submit their responses to this RFP as detailed in this Section (Section 5) and in

Schedules 1 to 6 of this RFP to enable a comprehensive and accurate assessment of their proposal against

the evaluation criteria.

5.2 Schedule 1: Statement of Requirements

Australian Pork Limited (APL) invites suitable consultancy firms (Respondents) to respond to this Request

for Proposal (RFP) for the provision of:

A report on the economic impacts of the Australian pork industry. This project will be used to assess

the impact of government regulations, disease and quarantine initiatives, infrastructure, and competition

policies in Australia.

5.3 Schedule 2: Respondents’ Profile

Respondents must include in their proposal information about their organisation, experience,

subcontractors, insurance and referees as required in the Respondent Profile Schedule 2.

5.4 Schedule 3: Pricing

Respondents must include in their proposal the Pricing for the consultancy services as required in Pricing

Schedule 3.

5.5 Schedule 4: Statement of Compliance

Respondents must include in their proposal a Statement of Compliance as required in Schedule 4.

5.6 Schedule 5: Confidentiality Deed

Respondents must sign a Confidentiality Deed prior to provision of any information by APL as required

in Schedule 6.

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SCH EDU LE 1 – STAT E ME NT O F REQU IRE ME NT S

S1.1 Introduction

Australian Pork Limited (APL) requires a report on the economic impacts of the Australian pork

industry.

S1.2 Sub-Contracting

Where components of a Respondents’ proposal are supplied by a third party the Respondent must

contract with the third party itself. APL will only contract directly with the Respondent and the

Respondent will provide all warranties.

S1.3 Proposed Schedule

Milestone Proposed Date

Issue of RFP 20 December 2016

Closing Time of RFP 5pm 31 January 2017

Evaluation of RFP’s completed 17 February 2017

Notification to Preferred Consultancy Firm 20 February 2017

Contract Signed 27 February 2017

Commencement date 1 March 2017

Progress report and review 1 May 2017

Final report delivered for APL review 30 June 2017

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SCH EDU LE 2 – RESPONDE NTS ’ PRO FILE

Respondent must complete the following tables and attach the relevant documentation.

Respondents’ Details

Contact Person Name

Contact Details

Company Name

Trading Name

Registered Office

Place of Incorporation

Postal Address

Principal Place of Business

Australian Company Number

Australian Business Number

Website Address

Current Directors &

Appointment Date (if applicable)

Number of Full Time Employees:

Substantial Shareholders (>20%

of issued capital)

For a foreign firm or company,

details of the place of business in

Australia and the name of any

Australian representative

Details of any trust or fiduciary

capacity in which you propose to

provide the Services

Details of any litigation,

arbitration, mediation,

conciliation or proceeding

whatsoever including any

investigations

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Conditions of Participation

Is the Respondent, or any of its

subcontractors, bankrupt or

insolvent?

Has the Respondent, or any of

its subcontractors, had any

significant deficiencies in

performance of any substantive

requirement or obligation under

a prior contract?

Is the Respondent, or any of its

subcontractors, named as not

complying with the Equal

Opportunity for Women in the

Workplace Act 1999?

Does the Respondent agree to

comply with the minimum stated

RFP validity period?

Does the Respondent wish to

declare any circumstances or

relationships which constitute or

may constitute a conflict or

potential conflict of interest in

relation to this RFP or the

Respondents obligations under

any contract resulting from this

RFP?

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Related Body Corporate

Full name of Related Body

Corporate



Status of related company

Country of residence of

registered office of the ultimate

parent entity

Details of any related companies

within the meaning of Section 50

of the Corporations Law

Note: A separate table should be completed for each Related Body Corporate.

Subcontractors

Name of Subcontractor



Services to be provided

Estimated percentage of the

total Contract

Note: A separate table should be completed for each Subcontractor.

Evidence of Financial Viability and Capability

Submit evidence of financial viability and capability to perform the Contract.

Evidence of financial viability and

capability to perform the

Contract.

APL RFP: 2016/201

18

Insurance

Public Liability Submit copies of the Certificate of Currency as a numbered

attachment to the proposal and reference the attachment here.

Professional Indemnity Submit copies of the Certificate of Currency as a numbered


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Other (Please Specify) Submit copies of the Certificate of Currency as a numbered


Note: Details of additional relevant insurance should be included in the above table.

Conflict of Interest

Conflict of Interest or potential


Proposed method for managing


Capability and Experience

Name of Organisation

Description of the Services

Provided

Estimated Size/Budget

Period

Nature of Complexities

Key Personnel and their roles-

include their position within

organisation and a brief

description of relevant job

qualifications, experience and

skill level

Note: A separate table should be completed for each organisation.

Referees

Name of Referee

Name of Organisation

Location:

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their job title:

Telephone Numbers:

Email address:

Brief description of work

performed:

APL RFP: 2016/201

19

Describe the outcomes for the

client organisation. Include

information in $’s value:

Note: A separate table should be completed for each referee. At least 3 references are required.

APL RFP: 2016/201

20

SCH EDU LE 3 – PR ICING

The Pricing schedule for this RFP must be provided as an Excel worksheet called Schedule 3 Pricing.xls

Respondents must complete an Excel worksheet and submit with their proposal.

Respondents must specify any assumptions made by them which are applicable to their proposal as

specified in this RFP and the Statement of Requirement.

APL RFP: 2016/201

21

SCH EDU LE 4 – STAT E ME NT O F COMPLIANCE

Respondents must state their partial compliance or non-compliance with each clause and clause number

of this RFP including the Conditions of Proposal, and the Statement of Requirement.

Responses must be in the order in which the clauses appear and refer to the relevant number, Schedule

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Where a Proposal does not comply with a particular clause, the manner and extent of non-compliance,

including and the details of any proposed amendment, must be stated.

Respondents should complete the Statement of Compliance on an exceptions basis. APL will assume that

the Respondent complies with all clauses of the RFP, Conditions of Proposal or Statement of Requirement

unless otherwise stated.

In completing the ‘Compliance Status’ column in the table below Respondents should use one of the

following expressions only, against each clause:

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requirement of the provision is not met by the proposal.

Respondents must write the words “Not Applicable” in the column headed ‘Clause’ if proposals are fully

compliant.

RFP

Clause Compliance Status Reason(s) for non or partial

compliance

Schedule 1


compliance

Schedule 2


compliance

Schedule 3


compliance

APL RFP: 2016/201

22

Schedule 4


compliance

Schedule 5


compliance

APL RFP: 2016/201

23

SCH EDU LE 5 – CO NFIDENT IALITY DE ED

THIS DEED is made the day of 2015

between Australian Pork Limited (APL)

and

[Insert name and address of employee, agent, subcontractor of the Respondent] (Confidant)

RECITALS

A. APL has released a request for proposal (APL RFP No. 2016/201) for the production of a report

on the economic impacts of the Australian pork industry (Request for Proposal).

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Confidential Information means APL Confidential Information.

Contract has the same meaning as defined in the Request for Proposal.

APL Confidential Information means information disclosed by APL, or any representations of APL,

to the Confident that:

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(d) is comprised in or relates to APL Material; or

(e) is personal information under the Privacy Act 1988.

and includes (without limitation) information of a commercial nature relating to APL or its activities, but

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APL Material means any material provided by APL to the Confidant for the purposes of the Request

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2.1 The Confidant must not copy, reproduce or disclose any APL Confidential Information without the

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3.1 The Confidant must use the APL Confidential Information only for the purpose of producing the

Trade Report, under or in relation to the Request for Proposal.

APL RFP: 2016/201

24

4. SECURITY

4.1 If requested by APL, the Confidant must cooperate in any security checks APL or the wishes to

make of the Confidant (including by providing information usually requested in such circumstances).

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of all documents in the possession or control of the Confidant which contain APL Confidential

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Confidential Information.

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may result in a conflict of interest with the Confidant’s receipt of APL Confidential Information.

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7.1 The obligations in this Deed are perpetual.

8. INDEMNITY

8.1 The Confidant indemnifies APL against any claim, loss, liability or expense incurred by APL which is

caused or contributed to by:

(a) the Confidant’s failure to comply with this Deed; or

(b) the act or omission of the Confidant’s employees, agents or subcontractors in relation to APL

Confidential Information.

APL RFP: 2016/201

25

EXECUTED as a Deed

Dated: ……………………………………….

EXECUTED by

……………………………………………………

as authorised representative for Australian Pork

Limited (ABN 83 092 783 278) in the presence

of:

……………………………………………………

Signature of witness

…………………………………………………..

Name of witness (block letters)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

By executing this Deed the signatory warrants

that the signatory is duly authorised to execute

this Deed on behalf of Australian Pork Limited

(ABN 83 092 783 278)

EXECUTED by

……………………………………….

as authorised representative for [insert name of

Licensee (ABN XXXXXXXXX)] in the

presence of:

……………………………………………………

Signature of witness

…………………………………………………..

Name of witness (block letters)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

By executing this licence the signatory warrants

that the signatory is duly authorised to execute

this licence on behalf of [insert name of Licensee,

ABN XXXXXXXXX]

APL RFP: 2016/201

26

--- End ---

Pig production and pig meat processing in Australia 2010-11

Economic Impact Report

Prepared for Australian Pork Limited

3rd August 2012

Disclaimer

Any representation, statement, opinion or advice, expressed or implied, in this publication is made in good faith, but on the basis that the Western Research Institute (WRI) or its employees are not liable (whether by reason of negligence, lack of care or otherwise) to any person for any damage or loss whatsoever, which has occurred or may occur in relation to that person taking (as the case may be) action in respect of any representation, statement or advice referred to above.

Contact Details:

Contact Person: Lesley Arthur

Street Address:

The Flannery Centre341 Havannah StBathurst NSW 2795

Mailing Address:

PO Box 9374Bathurst NSW 2795

Ph: 02 6333 4000Email: [email protected]: www.wri.org.au

11028 APL 2011/ Reports

3

CONTENTSEXECUTIVE SUMMARY 4

1. INTRODUCTION 11

2. TRENDS IN PIG PRODUCTION IN AUSTRALIA 12

3. ECONOMIC IMPACT OF THE PIG PRODUCTION SECTOR 15

4. ECONOMIC IMPACT OF THE PIG PROCESSING SECTOR 21

5. OVERALL IMPACT OF THE PORK INDUSTRY IN AUSTRALIA 24

APPENDIX 1: COMPARISON WITH PREVIOUS STUDIES 32

APPENDIX 2. METHODOLOGY 35

APPENDIX 3. SIRE METHODOLOGY 39

Acknowledgements

WRI would like to acknowledge the assistance of staff at Australian Pork Limited, producers and processors who contributed to this study.

4

EXECUTIVE SUMMARY

Overall impact of the pork industryThe economic impacts were assessed using primary data gathered from producers and processors. National and state input-output tables were developed using the GRIT technique and analysed using Simulating Impacts on Regional Economies (SIRE).

The economic impact of the pork industry1, including pig production, primary processing and secondary processing and wholesaling of both domestically produced and imported pig meat, up to delivery to the retail and food services sector in Australia is shown in Table 1.

When flow-on effects are taken into account, the pork industry (excluding any contribution by the retail or food services sector) contributes almost $2.8 billion in gross domestic product, more than $1.3 billion in household income and underpins more than 20,000 full-time equivalent (FTE) jobs. This equates to 0.20 per cent of gross domestic product and 0.21 per cent of FTE jobs in Australia.

The key industry sectors, as defined by the Australian Bureau of Statistics2, benefiting from flow-on employment as a result of pig production, processing and wholesaling in Australia are:

• Transport, postal and warehousing (1,074 jobs);

• Retail trade (973 jobs);

• Other food and beverage manufacturing (864 jobs);

• Accommodation and food services (765 jobs); and

• Other services (753 jobs).

1 A brief description of the various sub-sectors of the pork industry is provided in Appendix 2

2 Australian Bureau of Statistics industry classifications used in this analysis are outlined in Appendix 2.

The pork industry is comprised of a number of inter-linked components. The pig production sector sells directly to abattoirs, smallgoods manufacturers and retailers, but also sells to meat wholesalers, who in turn supply retail outlets, smallgoods manufacturers and other wholesalers as well as the food service industry. By the same token, abattoirs may purchase pigs directly for on-selling after killing and boning but many derive the major portion of their income from service kill operations. The economic impact of the pig production sector, the primary processing sector, which undertakes slaughtering and boning of domestically produced pigs, and secondary processing and wholesaling of both domestically produced and imported pig meat have been examined as “stand alone” entities. However, because of the intra-industry purchases, the overall impact of the pork industry on the Australian economy is smaller than the aggregation of the individual components.

Impact of the pig production sector

Producers responding to the survey held approximately 30 per cent of the breeding sows estimated for Australia, although this percentage varied between states. Data provided by producers was adjusted to reflect the total number of breeding sows in each state and nationally. The economic impact of pig production in each state and nationally is summarised in Table 2 overleaf. This examines the impact of the pig production sector as a self-contained entity. As a result of intra-industry linkages, the overall impact of pig production as a subset of the pork industry as a whole is lower.

ECONOMIC IMPACT REPORT

Value Added $m

Household Income

$m

EmploymentFTE

Total incl. flow-on 2,775.98 1,332.46 20,054

% of Australia 0.20% 0.20% 0.21%

• Table 1. Economic Impact of the pork industry Australia , 2010-11

AUSTRALIAN PORK

5

When flow-on effects are taken into account, the pig production sector contributes 0.07 per cent of the gross domestic product of Australia and 0.08 per cent of FTE jobs. The contribution to individual state product ranges from a low of 0.02 per cent in Tasmania to a high of 0.20 per cent in South Australia. This reflects the number of breeding sows in each state when compared with the population and workforce. On average there were 12.5 breeding sows per 1,000 population across Australia but this varied from a high of 31.2 per 1,000 persons in South Australia to a low of 3.4 in Tasmania.

The economic contribution of the pig production sector nationally is greater than the aggregate of the six states as it includes all expenditure made by pig producers in Australia, whereas expenditure by producers in another state outside that in which they are based is classed as an import. The states benefiting most from inter-state flows are Victoria and New South Wales whereas producers in Queensland were more likely to make purchases outside the state.

Impact of the processing and wholesaling sectorWhilst differentiation between primary and secondary processing is possible to a certain extent, the intra-industry linkages mean that there is some double counting if the economic impact of the overall processing sector is measured by aggregating the individual sub-sectors. Accordingly, the economic impact of the processing and wholesaling sector has been assessed as one entity, with all purchases of domestically produced pigs assumed to have been made directly from the pig production sector.

The results of the assessment of the economic impact of the pig processing and wholesaling sector in Australia are shown in Table 3.

Value Added $m

Household Income

$m

EmploymentFTE

New South Wales

Total incl. flow-on 262.50 132.80 2,013

% of state 0.06% 0.06% 0.07%

Queensland


% of state 0.07% 0.07% 0.07%

South Australia


% of state 0.20% 0.17% 0.18%

Tasmania

Total incl. flow-on 4.96 1.83 35

% of state 0.02% 0.02% 0.02%

Victoria


% of state 0.09% 0.08% 0.09%

Western Australia


% of state 0.04% 0.05% 0.06%

Australia

Total incl. flow-on 1,019.31 471.59 7,594

% of Australia 0.07% 0.07% 0.08%

Table 2 Economic impact of the pig production sector, 2010-11

Value Added $m

Household Income

$m

EmploymentFTE


% of Australia 0.19% 0.18% 0.20%

Table 3 Economic impact of pig processing and wholesaling in Australia, 2010-11

6

The pig processing and wholesaling sector across Australia, when examined as a “stand alone” entity rather than part of the overall pork industry chain, is estimated to contribute more than $2.6 billion to gross domestic product, $1.2 billion in household income and almost 19,500 FTE jobs when flow-on effects are taken into account.

The key industry sectors benefiting from flow-on employment as a result of pig processing and wholesaling in Australia are:

• Agriculture, forestry and fishing (3,292 jobs);

• Transport, postal and warehousing (1,025 jobs);


• Other food and beverage manufacturing (732 jobs); and

• Accommodation and food services (714 jobs).

Impact of importsPig production and slaughtering has undergone a steady decline in recent years, although there are indications it has recovered somewhat in 2010-11. At the same time, there has been significant growth in the quantity of pig meat imported to the extent that by 2010-11, imports made up almost half the pork and processed products consumed in Australia. If the fresh or frozen imported pig meat was produced domestically it would represent an increase in domestic pig production of more than 66 per cent which, in turn, would have a significant impact on the pig production sector in Australia and on the primary processing sector locally.

Table 4 outlines the economic impact of the pig production sector nationally, when examined as a stand alone entity, in the absence of imports.

If domestic producers were to supply the entire domestic demand, both fresh and processed, the contribution of the pig production sector to gross domestic product would increase to $1.71 billion when flow-on effects are taken into account. This represents an increase of 68 per cent when compared with current levels. Similarly, total FTE employment, including flow-on effects, would rise to approximately 12,700 jobs nationally, an increase of more than 65 per cent when compared with actual levels estimated for 2010-11.

Table 5 below outlines the economic impact of the pig processing sector nationally in the absence of imports, again measured as a stand alone entity rather than as a subset of the entire pork industry.

If domestic producers were to supply the entire domestic demand, both fresh and processed, the contribution of the pig processing and wholesaling sector to gross domestic product would increase to almost $3.3 billion when flow-on effects are taken into account. This represents an increase of 24 per cent when compared with current levels. Similarly, total FTE employment, including flow-on effects, would rise to more than 25,000 jobs nationally, an increase of 30 per cent when compared with actual levels estimated for 2010-11.

The preceding analysis outlined the impact of imports on pig production and pig meat processing and wholesaling as self-contained units. However, intra-industry linkages mean that aggregating the total impacts, including flow-on effects, would overstate the impact of imports on the entire pork industry.


Value Added

$m

Household

Income

$m

Employment

FTE


% of Australia 0.12% 0.12% 0.13%

Table 4 Economic impact of pig production in the absence of imports, Australia, 2010-11

Value Added $m

Household Income

$m

EmploymentFTE


% of Australia 0.24% 0.23% 0.26%

Table 5 Economic impact of pig processing and wholesaling in the absence of imports in Australia, 2010-11

AUSTRALIAN PORK

7

After removing the intra-industry

linkages, a comparison of the

impact of the pork industry at

present i.e. with imports and

under a scenario with no imported

pigmeat is outlined in the adjacent

table.

It has been estimated that, in the absence of imports, total employment including flow-on impacts would increase by 34 per cent or approximately 6,800 FTE jobs. The increase attributable to the producers’ sector including flow-on effects is estimated to be approximately 3,360 FTE jobs, an increase in the total impact of that sector of 61 per cent. The increase in the processing and wholesaling sector is estimated to be approximately 3,400 FTE jobs, including flow-on effects, a rise of 23 per cent as illustrated in Figure 1.

Table 6 Comparison of the pork industry with and without imports, Australia 2010-11

Value Added $m

Household Income

$m

EmploymentFTE

Current (with imports)

Producers 756.25 362.84 5,547

Processing & Wholesaling 2,019.73 969.62 14,507

Total 2,775.98 1,332.46 20,054

Without imports

Producers 1,234.47 584.69 8,909

Processing & Wholesaling 2,370.45 1,189.14 17,915

Total 3,604.92 1,773.83 26,824

Change - quantity

Producers 478.23 221.85 3,362

Processing & Wholesaling 350.71 219.52 3,408

Total 828.94 441.37 6,770

Change - %

Producers 63.2% 61.1% 60.6%

Processing & Wholesaling 17.4% 22.6% 23.5%

Total 29.9% 33.1% 33.8%

Figure 1: Impact of cessation of imports on FTE employment, Australia 2010-11

5,5478,909

14,507

17,915

0

5,000

10,000

15,000

20,000

25,000

30,000

With Imports Without Imports

FTE jobs

Producers Processors

8

ECONOMIC IMPACT STUDY

Similarly the impact on value

added is an estimated increase

of $478 million or 63 per cent in

the producer sector when flow-

on effects are taken into account.

The impact on value added for the

processing and wholesaling sector

is an increase of $351 million or

17 per cent after accounting for

flow-on impacts, as illustrated in

Figure 2.

Figure 2: Impact of cessation of imports on value added, Australia 2010-11

7561,234

2,020

2,370

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000


$ million


Changes in the contribution of the pork industry

Direct comparison between the results found in this economic impact assessment of the pork industry and its components and the assessment undertaken for 2006-07 should be treated with caution for a number of reasons, as outlined in Appendix 1. The apparent changes in the overall impact of the pig production sector, including flow-on effects, between 2006-07 and 2010-11 are illustrated in the table adjacent.

Table 7: Changes on overall impact of the pig production sector between 2006-07 and 2010-11

Whilst the industry has experienced some contraction in terms of number of breeding sows

up to 2009-10, there are indications of expansion of the sector in 2010-11 when compared

with the previous year. In general, the number of FTE jobs underpinned by the pig production

sector has fallen but the contribution to gross domestic or state product has generally grown

in real terms. This would suggest increased efficiency in the sector resulting from increased

average size of enterprises with greater economies of scale.

Employment FTE Value Added

Australia

New South Wales

Queensland

South Australia

Tasmania

Victoria

Western Australia

AUSTRALIAN PORK

9

1. INTRODUCTIONAustralian Pork Limited (APL) commissioned the Western Research Institute (WRI) to prepare an assessment of the economic impact of pig production and pig meat processing in Australia for 2010-11. This study follows similar assessments undertaken for 2007-08 and 2001-02. Whilst direct comparisons with previous studies are not possible3 commentary is provided on the implications of any significant changes in results in Appendix 1 to this report.

The following report examines the impact of the pig production sector in each of the six states where pigs are grown commercially. The overall impact on the Australian economy is then examined. The economic impact of the pig meat processing sector is provided at the national level only to ensure confidentiality of data. The economic impacts were assessed using primary data gathered from producers and processors. National and state input-output tables were developed using the GRIT technique and analysed using Simulating Impacts on Regional Economies (SIRE). Details regarding the methodology utilised in preparing this economic impact assessment as well as information regarding the inter-industry model are provided as Appendices to this report.

It should be noted that the economic impact of each of the pig production, primary processing and secondary processing sectors is examined as “stand alone” industries4. However, as there are considerable intra-industry linkages within the pork industry as a whole, aggregation of these individual sectors would result in double-counting of expenditure and flow-on effects, causing significant over-estimation of the economic impact of the pork industry as a whole. In the final section of this report, the estimate of the economic impact of the pork industry in its entirety (excluding any contribution from the retail and food services sectors) has been calculated by aggregating individual income and expenditure data which enables the identification of intermediate sales and purchases within the overall sector. This in turn permits an assessment of the overall industry sector which is smaller than the sum of the constituent parts because of the existence of intra-industry purchases.

3 Direct comparison with earlier studies is not possible for a number of reasons including changes in Australian Bureau of Statistics industry classifications, updated national input-output tables and significant improvements to the inter-industry model utilised in the analysis.

4 A brief description of the various sub-sectors of the pork industry is provided in Appendix 2.

10

2. TRENDS IN PIG PRODUCTION IN AUSTRALIA

The pig production sector of the Australian economy has faced a number of challenges in recent years including widespread drought, high feed costs as a result of the rising cost of grain, the impact of imported pig meat and, more recently, the high Australian dollar.

At year end June 30 2006, there were some 302,000 breeding sows recorded in Australia according to Australian Bureau of Statistics (ABS) data (ABS Cat. No. 7121.0). By 2009-10, this had decreased to 231,600, a statistically significant trend decline of 6.4 per cent per annum. There are however signs that this trend has turned around in 2010-11 with preliminary data released by the ABS indicating that the number of breeding sows had risen by 13 per cent compared with the previous year. Figure 2.1 below illustrates the changing numbers of breeding sows recorded by state.

The number of pigs slaughtered in Australia has also exhibited similar trends as shown in Figure 2.2 overleaf. Between 2005-06 and 2009-10, the number of pigs slaughtered in Australia decreased by an average of 4.0 per cent per annum, although the most significant decrease was found between 2007-08 and 2008-09 when numbers dropped by more than 13 per cent. In recent years, the number of pigs slaughtered has increased marginally with an average annual growth rate of 1.8 per cent between 2008-09 and 2010-11.


Figure 2.1 Number of breeding sows, year end June 30, 2005-06 to 2010-11

Over the five year period to 2009-

10, the most significant decrease

in the number of breeding sows

was found in Western Australia

with an annual average decrease of

8.6 per cent per annum. However,

preliminary data from the ABS for

2010-11 indicates a significant

turnaround, with an increase of

more than 60 per cent compared

with the previous year and the only

state to record higher numbers

when compared with 2005-06 data.

All other states recorded a decrease

in the number of breeding sows

between 2005-06 and 2010-11

(with the exception of Tasmania

which remained static), representing

an overall decrease nationally of

more than 13 per cent.

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2005 06 2006 07 2007 08 2008 09 2009 10 2010 11

Number of breedingsows at year end

New South Wales Victoria Queensland

South Australia Western Australia Tasmania

Source: ABS Cat. No’s 7121.0, 7111.0

AUSTRALIAN PORK

11

Notwithstanding decreased production of pig meat in Australia in recent years, apparent consumption had increased by almost 20 per cent between 2005-06 and 2010-11 as shown in Table 2.1.

Figure 2.2 Number of pigs slaughtered, Australia, 2005-06 to 2010-11

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2005 06 2006 07 2007 08 2008 09 2009 10 2010 11

Number of pigsslaughtered ('000)

New South Wales Victoria Queensland

South Australia Western Australia Tasmania

Source: ABS Cat. No. 7218.0.55.001

The most significant decrease in

the number of pigs slaughtered was

experienced in New South Wales,

resulting from a decrease in pig

production as evidenced by the fall

in the number of breeding sows, but

also from the closure of a major pig

processing abattoir in Young.

After allowing for imports and

exports of pig meat and processed

pork products, apparent usage

of pig meat domestically had

increased from 22.6 kilograms per

head of population in 2005-06 to

24.6 kilograms per capita in 2010-

11, representing an increase in

overall usage of almost 20 per cent.

However, much of this increased

usage was sourced from imported

pig meat and processed pork

products, which increased by more

than 80 per cent over the same

period. In 2010-11, imported goods

made up almost 48 per cent of

apparent consumption, a significant

increase from the level seen in

2005-06.

Table 2.1 Production and usage of pig meat products, Australia, 2005-06 to 2010-11

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Productiona

(‘000 tonnes)389 382 377 322 331 342

Importsa

(‘000 tonnes)145 214 207 257 288 265

Exportsa

(‘000 tonnes)67 63 59 49 47 50

Net domestic usagea

(‘000 tonnes)

467 533 525 530 572 557

Usage per capitaa (kg)

22.6 25.3 24.4 24.1 25.7 24.6

Imports as a % of net domestic usage

31.0% 40.2% 39.4% 48.5% 50.3% 47.6%

Note a: Carcass weight

Source: Department of Agriculture, Fisheries and Forestry, Australian Food Statistics, 2010-11, ABS Cat. No. 3218.0

12


Whilst some of this imported product may not be in direct competition with domestically produced goods for varying reasons, such as consumer preference for specialised products such as Iberian or Parma ham, the vast majority of imports are competing with locally grown pigs. Unpublished data from the ABS indicates that in 2010-11 imports of fresh, chilled or frozen meat of swine totalled approximately 128,000 tonnes. When converted to a carcass weight equivalent using a factor of 0.565, this equates to approximately 229,000 tonnes. If the fresh or frozen imported pig meat was produced domestically it would represent an increase in domestic pig production of more than 66 per cent, which in turn would have a significant impact on the pig production sector in Australia and on the primary processing sector locally.

5 Conversion factor supplied by APL.

AUSTRALIAN PORK

13

The key industry sectors benefiting

from flow-on employment as a

result of pig production in New

South Wales are:

• Food and beverage

manufacturing (170 jobs);

• Agriculture, forestry and fishing

(117 jobs);


• Transport, postal and

warehousing (112 jobs); and

• Professional, scientific and

technical services (86 jobs).

3. ECONOMIC IMPACT OF THE PIG PRODUCTION SECTOR

Information provided by pig producers around Australia was analysed and compared with data regarding the number of breeding sows in 2009-10 published by the Australian Bureau of Statistics (ABS). That data was used to scale up the survey information to reflect the total pig production sector regionally, by state and nationally. The following section provides a summary of the results of the analysis of the pig production sector as a self-contained entity. The overall impact of pig production as a subset of the pork industry is lower because of intra-industry flows. This is addressed in Section 5 of this report.

3.1 ECONOMIC IMPACT IN NEW SOUTH WALESThe survey data reflected approximately 17 per cent of the total number of breeding sows in New South Wales. The financial and employment data obtained from the producers was adjusted to reflect the total number of breeding sows in the state.

The results of the assessment of the economic impact of the pig production sector in New South Wales are shown in Table 3.1.

The pig production sector located in New South Wales is estimated to contribute $262 million to the gross state product, $133 million in household income (predominantly wages and salaries) and more than 2,000 full-time equivalent (FTE) jobs when flow-on effects are taken into account.

In addition, the survey data suggest that the sector supports an estimated 250 persons who are classified as unpaid workers, including family members, who presumably derive some economic benefit from participation in the sector.

Overall, the pig production sector underpins approximately 0.06 per cent of New South Wales gross state product and 0.07 per cent of its FTE employment.

Table 3.1 Economic impact of pig production in New South Wales, 2010-11

Value Added $m

Household Income $m

EmploymentFTE


% of New South Wales 0.06% 0.06% 0.07%

14


3.2 ECONOMIC IMPACT IN QUEENSLAND

The survey data reflected approximately 37 per cent of the total number of breeding sows in Queensland. The financial and employment data obtained from the producers was adjusted to reflect the total number of breeding sows in the state.

The results of the assessment of the economic impact of the pig production sector in Queensland are shown in Table 3.2.

The pig production sector located in Queensland is estimated to contribute $182 million to the gross state product, $84 million in household income and more than 1,400 FTE jobs when flow-on effects are taken into account.

In addition, the survey data suggests that the sector supports more than 80 persons who are classified as unpaid workers, including family members, who presumably derive some economic benefit from participation in the sector.

Overall, the pig production sector underpins approximately 0.07 per cent of both the gross state product and FTE employment in Queensland.

3.3 ECONOMIC IMPACT IN SOUTH AUSTRALIAThe survey data reflected approximately 55 per cent of the total number of breeding sows in South Australia. The financial and employment data obtained from the producers was adjusted to reflect the total number of breeding sows in the state.

The results of the assessment of the economic impact of the pig production sector in South Australia are shown in Table 3.3.


from flow-on employment as

a result of pig production in

Queensland are:




(116 jobs);






Value Added $m

Household Income $m

EmploymentFTE


% of Queensland 0.07% 0.07% 0.07%

Table 3.2 Economic impact of pig production in Queensland, 2010-11

Value Added $m

Household Income $m

EmploymentFTE


% of South Australia 0.20% 0.17% 0.18%

Table 3.3 Economic impact of pig production in South Australia, 2010-11

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15

AUSTRALIAN PORK



result of pig production in Tasmania

are:


(3 jobs); and


manufacturing (also 3 jobs).

The pig production sector located in South Australia is estimated to contribute $180 million to the gross state product, $71 million in household income and more than 1,250 FTE jobs when flow-on effects are taken into account.

In addition, the survey data suggests that the sector supports more than 120 persons who are classified as unpaid workers, including family members, who presumably derive some economic benefit from participation in the sector.

Overall, the pig production sector underpins approximately 0.20 per cent of the gross state product of South Australia and 0.18 per cent of its FTE employment.

3.4 ECONOMIC IMPACT IN TASMANIAThe survey data reflected approximately 27 per cent of the total number of breeding sows in Tasmania. The financial and employment data obtained from the producers was adjusted to reflect the total number of breeding sows in the state.

The results of the assessment of the economic impact of the pig production sector in Tasmania are shown in Table 3.4.

The pig production sector located in Tasmania is estimated to contribute $5 million to the gross state product, $2 million in household income and approximately 35 FTE jobs when flow-on effects are taken into account

Overall, the pig production sector underpins approximately 0.02 per cent of both the gross state product and FTE employment of Tasmania.

Value Added $m

Household Income $m

EmploymentFTE


% of Tasmania 0.02% 0.02% 0.02%

Table 3.4 Economic impact of pig production in Tasmania, 2010-11



result of pig production in South

Australia are:


(98 jobs);






• Accommodation and food

services (56 jobs).

16


3.5 ECONOMIC IMPACT IN VICTORIAThe survey data reflected approximately 28 per cent of the total number of breeding sows in Victoria. The financial and employment data obtained from the producers was adjusted to reflect the total number of breeding sows in the state.

The results of the assessment of the economic impact of the pig production sector in Victoria are shown in Table 3.5.

The pig production sector located in Victoria is estimated to contribute $294 million to the gross state product, $131 million in household income and more than 2,200 FTE jobs when flow-on effects are taken into account.

In addition, the survey data suggests that the sector supports almost 100 persons who are classified as unpaid workers, including family members, who presumably derive some economic benefit from participation in the sector.

Overall, the pig production sector underpins approximately 0.09 per cent of both the gross state product and FTE employment of Victoria.

3.6 ECONOMIC IMPACT IN WESTERN AUSTRALIAThe survey data reflected approximately 48 per cent of the total number of breeding sows in Western Australia. The financial and employment data obtained from the producers was adjusted to reflect the total number of breeding sows in the state.

The results of the assessment of the economic impact of the pig production sector in Western Australia are shown in Table 3.6.

The pig production sector located in Western Australia is estimated to contribute $81 million to the gross state product, $39 million in household income and more than 600 FTE jobs when flow-on effects are taken into account.




result of pig production in Western

Australia are:




(55 jobs);

• Other services (35 jobs);

• Retail trade (33 jobs); and


warehousing (29 jobs).

Value Added $m

Household Income $m

EmploymentFTE


% of Western Australia 0.04% 0.05% 0.06%

Table 3.6 Economic impact of pig production in Western Australia, 2010-11



result of pig production in Victoria

are:





(134 jobs);




Value Added $m

Household Income $m

EmploymentFTE


% of Victoria 0.09% 0.08% 0.09%

Table 3.5 Economic impact of pig production in Victoria, 2010-11

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17

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Overall, the pig production sector underpins approximately 0.04 per cent of the gross state product in Western Australia and 0.06 per cent of the state’s FTE employment.

3.7 ECONOMIC IMPACT IN AUSTRALIA

The survey data reflected approximately 30 per cent of the total number of breeding sows in Australia6. The financial and employment data obtained from the producers was adjusted to reflect the total number of breeding sows nationally.

The results of the assessment of the economic impact of the pig production sector in Australia are shown in Table 3.7.

The pig production sector across Australia is estimated to contribute more than $1 billion to the gross domestic product, $472 million in household income and almost 7,600 FTE jobs when flow-on effects are taken into account.

The economic contribution of the pig production sector nationally is greater than the aggregate of the six states as it includes all expenditure made by pig producers in Australia. Within the individual states, expenditure made outside that state is classed as an import e.g. pig producers in New South Wales may purchase medications from South Australia. These purchases impact on the economy of South Australia rather than New South Wales and have not been included in the analysis of individual states. The states benefiting most from inter-state flows are Victoria and New South Wales whereas producers in Queensland were more likely to make purchases outside the state.

Overall, the pig production sector, measured as a stand alone entity, underpins approximately 0.07 per cent of the gross domestic product and 0.08 per cent of Australia’s FTE employment.

6 The overall response rate for Australia reflected a confidence interval of +/- 6.4% at the 95% confidence level. Further information about the survey is provided in Appendix 2.



result of pig production in Australia

are:




(553 jobs);





services (325 jobs).

Value Added $m

Household Income $m

EmploymentFTE


% of Australia 0.07% 0.07% 0.08%

Table 3.7 Economic impact of pig production in Australia, 2010-11

18


3.8 ECONOMIC IMPACT OF IMPORTSAs outlined earlier in this report, if the total amount of pig meat imported into Australia was supplied from pigs grown locally, the total number of pigs produced would need to increase more than 66 per cent. In assessing the impact of the cessation of imports and replacement with domestically grown product, it has been assumed that this would primarily be undertaken by larger7 producers. Accordingly, the pattern of expenditure associated with larger pig producers has been utilised to determine the incremental impact, rather than the distribution of expenditure across the industry overall. The table below outlines the economic impact of the pig production sector nationally in the absence of imports.

If domestic producers were to supply the entire domestic demand, both fresh and processed, the contribution of the pig production sector to gross domestic product would increase to $1.71 billion when flow-on effects are taken into account. This represents an increase of 68 per cent when compared with current levels. Similarly, total FTE employment, including flow-on effects, would rise to approximately 12,700 jobs nationally, an increase of more than 65 per cent when compared with actual levels estimated for 2010-11.

7 A breakdown of the distribution of producers by number of breeding sows is provided in Table 2, Appendix 2.


Value Added $m

Household Income $m

EmploymentFTE


% of Australia 0.12% 0.12% 0.13%

Table 3.8 Economic impact of pig production in the absence of imports, Australia, 2010-11

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19

AUSTRALIAN PORK

4. ECONOMIC IMPACT OF THE PIG PROCESSING SECTOR

The economic impact of the pig processing sector has only been assessed at the national level to maintain confidentiality of data provided by processors. The pig processing sector may be divided into two parts. Firstly, the primary processing sector which involves the activities of abattoirs and boning rooms producing dressed carcasses and cuts for direct sale or secondary processing. These activities apply only to domestically produced pork.

Secondary processing involves further value adding through activities such as cooking, curing, brining, smoking, fermenting or slicing creating a range of products including hams, bacon, sausages and other smallgoods. Secondary processing also includes packaging of products. Secondary processing can utilise domestically produced pig meat, imported pig meat or a combination of the two.

The economic impact of each part of the processing sector has been examined independently. However, owing to significant levels of intra-sectoral purchases, the overall economic impact of the pig processing sector cannot be measured as the sum of the parts, which would overstate the impact. The final part of this section examines the economic impact of the processing sector as a whole as one entity with all purchases of domestically produced pigs assumed to have been made directly from the pig production sector.

Any change in the level of imported product will impact on the output from the primary processing sector but will have little impact on the quantity of product generated by secondary processing unless there is a concomitant change in consumer demand.

4.1 ECONOMIC IMPACT OF THE PRIMARY PROCESSING SECTOR

The survey data reflected approximately 57 per cent of all pigs slaughtered in Australia in 2010-11. The financial and employment data obtained from the primary processors was adjusted to reflect the total number of pigs slaughtered nationally.

The results of the assessment of the economic impact of the primary processing sector in Australia are shown in Table 4.1.

The primary processing sector across Australia is estimated to contribute almost $480 million to the gross domestic product, $303 million in household income and approximately 4,300 FTE jobs when flow-on effects are taken into account.

Value Added $m

Household Income $m

EmploymentFTE


% of Australia 0.03% 0.05% 0.04%

Table 4.1 Economic impact of primary pig processing in Australia, 2010-11



result of pig primary processing in

Australia are:



services (172 jobs);


(168 jobs);



• Professional, scientific and

technical services (135 jobs).

20

ECONOMIC IMPACT STUDYECONOMIC IMPACT REPORT

Overall, the primary pig processing sector underpins approximately 0.03 per cent of the gross domestic product and 0.04 per cent of Australia’s FTE employment.

4.2 ECONOMIC IMPACT OF THE SECONDARY PROCESSING AND WHOLESALING SECTORS

Assessment of the economic impact of the secondary processing sector drew on information from a range of sources including:

• Primary data provided by secondary processors and wholesalers in Australia;

• Primary data regarding pigs produced in 2010-11 in terms of ratio of porkers and baconers;

• ABS data regarding the imported pig meat; and

• Industry estimates regarding the proportion of processed pork products derived from imported pig meat (APL, IBISWorld Pty Ltd, various state publications).

The results of the assessment of the economic impact of the secondary processing and wholesaling sector in Australia are shown in Table 4.2.

The secondary processing and wholesaling sector across Australia is estimated to contribute more than more than $2.2 billion to the gross domestic product, $972 million in household income and almost 15,500 FTE jobs when flow-on effects are taken into account.

Overall, the secondary pig processing sector, when examined as a standalone entity, underpins approximately 0.16 per cent of the gross domestic product and 0.16 per cent of Australia’s FTE employment.

4.3 ECONOMIC IMPACT OF THE PROCESSING AND WHOLESALING SECTORS

Whilst differentiation between primary and secondary processing is possible to a certain extent, the intra-industry linkages result in some double counting if the economic impact of the overall processing sector is measured by aggregating the individual sub-sectors. Accordingly, the economic impact of the processing and wholesaling sector has been assessed as one entity with all purchases of domestically produced pigs assumed to have been made directly from the pig production sector.

The results of the assessment of the economic impact of the pig processing and wholesaling sector in Australia are shown in Table 4.3 overleaf.



result of secondary pig processing

and wholesaling in Australia are:


(1,850 jobs);

• Other food and beverage

manufacturing (1,672 jobs);


warehousing (863 jobs);

• Retail trade (778 jobs); and



Value Added $m

Household Income $m

EmploymentFTE


% of Australia 0.16% 0.15% 0.16%

Table 4.2 Economic impact of secondary pig processing and wholesaling in Australia, 2010-11

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AUSTRALIAN PORK

The pig processing and wholesaling sector across Australia is estimated to contribute more than $2.6 billion to the gross domestic product, $1.2 billion in household income and almost 19,500 FTE jobs when flow-on effects are taken into account. Once again, this analysis assumes that the processing and wholesaling sector is a self-contained entity. The impact, including flow-on effects, as part of the overall pork industry is lower due to intra-industry flows. This is addressed in the following section of this report.

Overall, the pig processing and wholesaling sector underpins approximately 0.19 per cent of the gross domestic product and 0.20 per cent of Australia’s FTE employment.

4.4 ECONOMIC IMPACT OF IMPORTSAs outlined earlier in this report, if the total amount of pig meat imported into Australia was supplied from pigs grown locally, the total number of pigs produced would need to increase by more than 66 per cent. This in turn would impact on the primary processing sector as the additional stock produced locally would have to be slaughtered and boned in Australia. It has been assumed that there would be no impact on secondary processing as the additional pig meat supplied locally would replace the supply currently imported. In practice, there may be implications for the secondary processing sector through changes in price structure and product mix.

Table 4.4 below outlines the economic impact of the pig processing and wholesaling sector nationally in the absence of imports.

If domestic producers were to supply the entire domestic demand, both fresh and processed, the contribution of the pig processing and wholesaling sector to gross domestic product would increase to almost $3.3 billion when flow-on effects are taken into account. This represents an increase of 24 per cent when compared with current levels. Similarly, total FTE employment, including flow-on effects, would rise to more than 25,000 jobs nationally, an increase of 30 per cent when compared with actual levels estimated for 2010-11.


from flow-on employment as

a result of pig processing and

wholesaling in Australia are:


(3,292 jobs);


warehousing (1,025 jobs);



manufacturing (732 jobs); and



Value Added $m

Household Income $m

EmploymentFTE


% of Australia 0.19% 0.18% 0.20%

Table 4.3 Economic impact of pig processing and wholesaling in Australia, 2010-11

Value Added $m

Household Income $m

EmploymentFTE


% of Australia 0.24% 0.23% 0.26%

Table 4.4 Economic impact of pig processing and wholesaling in the absence of imports in Australia, 2010-11

The industry sectors which would

profit most from the cessation of

imports in terms of FTE employment

would be agriculture, forestry

& fishing and food & beverage

manufacturing, together accounting

for almost 57 per cent of the

additional FTE jobs. However, the

transport, postal & warehousing

sector and retail and wholesale

trade would also benefit from

increased employment.

22


5. OVERALL IMPACT OF THE PORK INDUSTRY IN AUSTRALIA

The pig meat industry in Australia is complex with many intra-industry linkages. The pig production sector sells directly to abattoirs, smallgoods manufacturers and retailers but also sells to meat wholesalers who in turn supply retail outlets, smallgoods manufacturers and other wholesalers as well as the food service industry. By the same token, abattoirs may purchase pigs directly for on-selling after killing and boning but many derive the major portion of their income from service kill operations. The increasing number of vertical linkages between pig producers, slaughtering facilities, marketing and wholesaling businesses makes it difficult to accurately assess the impact of each sub-sector and avoid double-counting. The results presented in this report reflect, in the main, data provided by producers, processors and wholesalers. However, in some cases this has been augmented by secondary data obtained from a variety of sources including APL publications, IBISWorld Pty Ltd and various state and federal government documents.

5.1 PIG PRODUCTIONThe pig production sector purchases goods and services from a variety of other industry sectors, with the purchase of grain, including on-farm growing, being the main contributor to operating expenses. Expenditure data from the survey, converted to basic prices8, indicates that approximately 56 per cent of operating costs are attributable to the purchase of feed, nutritional supplements and medications. Figure 5.1 illustrates the distribution of operating expenses by pig producers.

8 Basic prices are used to more accurately measure the impact of an industry across the overall economy. “Basic price is the amount receivable by the producer from the purchaser for a unit of a good or service produced as output, minus any tax payable, and plus any subsidy receivable, on that unit as a consequence of its production or sale. It excludes any transport charges invoiced separately. It also excludes charges related to the transport arranged by the producer and delivered by a third party without separate invoice.” (ABS Cat. No. 5209.0.55.001).


Wages and salaries make up almost

19 per cent of total operating

expenses amongst pig producers

in Australia. However, it should be

noted that this is influenced by

an over-representation of large

producers in the survey. Many small

producers would claim to have little

or no expenditure on wages and

salaries with work being undertaken

by the individual respondent and

unpaid family members.

Figure 5.1 Pig producers – distribution of operating expenses in basic prices

0% 10% 20% 30% 40% 50%

Food, Beverage & Tobacco Product Manufacturing

Wages & Salaries

Transport, Postal & Warehousing

Wholesale Trade

Chemical & Chemical Product Manufacturing

Taxes

Other Services

Agriculture, Forestry & Fishing

Electricity, Gas, Water & Waste Services

Retail Trade

Public Administration & Safety

Rental, Hiring & Real Estate Services

Professional, Scientific & Technical Services

Financial & Insurance Services

Administrative & Support Services

Information Media & Telecommunications

Textile, Leather, Clothing & Footwear Manufacturing

Accommodation & Food Services

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23

AUSTRALIAN PORK

5.2 PRIMARY PROCESSING OF PIGSAs a significant proportion of the primary processing sector’s activities relate to service kill of pigs, whereby the primary processor is not involved in the purchase of pigs, the single biggest operating expense is wages and salaries. Direct purchases from pig producers is the next most important component of expenditure, followed by expenditure on utilities, particularly electricity resulting from the significance of refrigeration in the industry. Several primary processors indicated that they expect a significant change in operating cost structures in the coming months as a result of the introduction of a price on carbon and the associated increase in delivered electricity costs. The distribution of expenditure by primary processors, derived from the survey, expressed in basic prices, is shown in Figure 5.3.

Revenue amongst primary processors of pigs is derived from service kill fees, sales to the food, beverage & tobacco manufacturing sector and wholesale trade. A small proportion is sold directly to the retail sector, as illustrated in figure 5.4 overleaf.

Figure 5.2 Pig producers – distribution of revenue

45%

45%

7% 3%


Wholesale Trade

Retail Trade


Sales by pig producers are

concentrated in the food, beverage

& tobacco manufacturing sector

and wholesale trade, with a smaller

proportion being sold directly to the

retail sector. A further 3 per cent of

revenue in the pig production sector

is estimated to be derived from

sales to others in the pig farming

sector. This is shown in figure 5.2.

Figure 5.3 Primary processors – distribution of expenditure in basic prices

0% 10% 20% 30% 40% 50% 60%

Wages & Salaries






Other Services

Pulp, Paper & Converted Paper Product Manufacturing

Wholesale Trade








Mining

Taxes

Health Care & Social Assistance


Education & Training

Retail Trade

24


5.3 SECONDARY PROCESSING AND WHOLESALING OF PIG MEAT

Wages and salaries are estimated to comprise approximately 14 per cent of total operating costs, based on survey data and other reports, as shown in Figure 5.5.


Figure 5.4 Primary processors – distribution of revenue

43%

34%

22%

1%

Food, Beverage & Tobacco ProductManufacturing


Wholesale Trade

Retail Trade

Clearly the purchase of pigs and/

or pig meat along with other

purchases from the food, beverage

& tobacco manufacturing sector

make up the major portion of

operating expenditure by secondary

processors and wholesalers in the

pig meat industry.

0% 20% 40% 60%


Wages & salaries


Wholesale Trade


Pulp, Paper & Converted Paper Product Manufacturing

Taxes


Other Services








Retail Trade



Figure 5.5 Secondary processors and wholesalers – distribution of operating expenses in basic prices

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25

AUSTRALIAN PORK

Revenue in the secondary

processing and wholesale sector is

primarily derived from sales to other

wholesalers and to the retail sector.

Sales within the food, beverage &

tobacco manufacturing sector form

another 8 per cent of sales whilst

sales to the accommodation & food

services sector make up a further 6

per cent. This is illustrated in Figure

5.6.

Figure 5.6 Secondary processors and wholesalers – distribution of revenue

48%

38%

8%6%

Wholesale Trade

Retail Trade



26


5.4 OVERALL IMPACT OF THE AUSTRALIAN PORK INDUSTRY

As noted earlier, the pork industry as a whole has numerous intra-industry linkages which means that measuring the overall impact of the industry, including flow-on effects, as an aggregate of the producer and processing sectors would result in significant over-estimation. Figure 5.7 provides an illustration of the pork value chain in Australia, highlighting the complexity of intra-industry linkages.

Source: ABS 2012 Customised Report, WRI analysis of survey data

Figure 5.7 Pork value chain – Australia, 2010-11

AUSTRALIAN PORK

27

AUSTRALIAN PORK

Creating a pork industry sector by aggregating income and expenditure data enables the identification of intermediate sales and purchases within the overall sector. This in turn permits an assessment of the economic impact of the overall industry sector.

The results of the assessment of the economic impact of the pork industry up to delivery to the retail and food services sector in Australia are shown in Table 5.1

When flow-on effects are taken into account, the pork industry (excluding any contribution by the retail or food services sector) contributes almost $2.8 billion in gross domestic product, more than $1.3 billion in household income and underpins more than 20,000 FTE jobs.

The above analysis examines the pork industry in 2010-11 when a significant proportion of pig meat utilised in secondary processing is derived from imports. If all pig meat currently imported was supplied by locally grown livestock, increasing the impact of the producers sector of the industry as well as primary processing, the overall impact of the pork industry on the Australian economy would increase as shown in Table 5.2.

The entire pork industry up to delivery to the retail and food services sector in Australia would be expected to increase its contribution to gross domestic product by $829 million or 30 per cent in the absence of imported pig meat, when flow on effects are taken into account. Similarly total FTE employment supported by the sector could be expected to increase by nearly 6,800 jobs, an increase of 34 per cent compared with current levels, when flow on effects are included.

Value Added $m

Household Income $m

EmploymentFTE


% of Australia 0.20% 0.20% 0.21%

Table 5.1 Economic impact of the pork industry in Australia, 2010-11

The key industry sectors, as

defined by the ABS, benefitting from

flow-on employment as a result

of pig production, processing and

wholesaling in Australia are:


warehousing (1,074 jobs);





services (765 jobs); and


Value Added $m

Household Income $m

EmploymentFTE


% of Australia 0.26% 0.27% 0.28%

Increase - quantity 828.94 441.37 6,770

Increase - % 30% 33% 34%

Table 5.2 Economic impact of the pork industry in the absence of imports in Australia, 2010-11

28


The distribution of increases between producers and the processing and wholesaling sector are illustrated in Figures 5.8 and 5.9.

The estimated changes in impacts for the producer and processor sector, when measured as a sub-sector of the pork industry, including flow-on effects are summarised in Table 5.3 opposite. It should be emphasised that these are lower than the individual impacts measured earlier in this report, which include significant levels of intra-industry flows and therefore cannot be aggregated. The data in the following table excludes the intra-industry flows and associated double counting when measuring the total impacts including flow-on effects.


It has been estimated that, in

the absence of imports, total

employment including flow-on

impacts would increase by 34 per

cent or approximately 6,800 FTE

jobs. The increase attributable to

the producers sector including

flow-on effects is estimated to

be approximately 3,360 FTE jobs,

an increase in the total impact

of that sector of 61 per cent. The

increase in the processing and

wholesaling sector is estimated to

be approximately 3,400 FTE jobs,

including flow-on effects, a rise of

23 per cent.

Figure 5.8 Changes in FTE employment in the absence of imports

Figure 5.9 Changes in value added in the absence of imports

5,5478,909

14,507

17,915

0

5,000

10,000

15,000

20,000

25,000

30,000


FTE jobs


7561,234

2,020

2,370

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000


$ million


Similarly the impact on value

added is an estimated increase

of $478 million or 63 per cent in

the producer sector when flow-

on effects are taken into account.

The impact on value added for the

processing and wholesaling sector

is an increase of $351 million or 17

per cent after accounting for flow-

on impacts.

AUSTRALIAN PORK

29

Value Added $m

Household Income $m

EmploymentFTE

Current (with imports)

Producers 756.25 362.84 5,547

Processing & Wholesaling 2,019.73 969.62 14,507

Total 2,775.98 1,332.46 20,054

Without imports

Producers 1,234.47 584.69 8,909

Processing & Wholesaling 2,370.45 1,189.14 17,915

Total 3,604.92 1,773.83 26,824

Change - quantity

Producers 478.23 221.85 3,362

Processing & Wholesaling 350.71 219.52 3,408

Total 828.94 441.37 6,770

Change - %

Producers 63.2% 61.1% 60.6%

Processing & Wholesaling 17.4% 22.6% 23.5%

Total 29.9% 33.1% 33.8%

Table 5.3 Comparison of the pork industry with and without imports, Australia 2010-11

30


APPENDIX 1: COMPARISON WITH PREVIOUS STUDIESDirect comparison between the results found in this economic impact assessment of the pork industry and its components and previous studies should be treated with caution for a number of reasons including:

• The assessment undertaken for the 2006-07 financial year used, as the base table, the national input output table for 2001-02 published by the Australian Bureau of Statistics (ABS). That table, as well as the National and State Accounts for 2006-07, used 1993 ANZSIC classifications of industries. The current assessment for 2010-11 used the 2007-08 national input output table as the base as well as National and State Accounts for 2010-11. These latter documents adopt the 2006 ANZSIC classification of industries which has some key variations from the earlier version, particularly in relation to the classification of sectors in food sales and service and repairs and maintenance. In addition, a key sector in the 1993 classification, “property and business services” has been subdivided into three sectors, but again there is no direct correlation. This has implications for the estimation of full-time equivalent employment numbers in the table and associated multiplier effects.

• The previous study included marginal income coefficients to remove the problems associated with linearity and associated over- estimation associated with traditional input output analysis. The SIRE model used in this study also includes marginal income coefficients, although these have been updated. However, it also includes a number of other coefficients as outlined in Appendix 3.

• The coverage obtained amongst survey respondents differs from the previous study which may impact on the overall results.

Notwithstanding the above, the following provides generalised commentary on changes noted between this study and that conducted for 2006-07.

AustraliaIn 2006-07 it was estimated that the pig production sector supported some 7,928 FTE jobs when flow-on effects are taken into account.

In 2010-11 this number has fallen by approximately 4 per cent to 7,594 FTE jobs. Over the same period, the estimated number of breeding sows nationally fell by 8 per cent and the number of pigs slaughtered decreased by almost 13 per cent. Despite the overall fall in FTE employment of 4 per cent, the direct impact on employment in the pig production sector was closer to 20 per cent. This is probably a result of smaller producers leaving the industry and increased consolidation of farms leading to greater economies of scale.

In 2006-07 it was estimated that the pig production sector contributed approximately $840 million to Australia’s gross domestic product. After adjusting for inflation9, it would appear that the pig production sector’s contribution to gross domestic product has risen marginally by around 3 per cent in real terms.

New South WalesWhen flow-on effects are taken into account, FTE employment in the pig production sector is estimated to have fallen by approximately 5 per cent between 2006-07 and 2010-11. Given that the estimated number of breeding sows in New South Wales fell by more than 23 per cent over the same period, it is not surprising to find that direct employment in the industry decreased by an estimated 16 per cent. Nevertheless, when flow-on effects are taken into account, the contribution of pig production to the state economy is estimated to have increased by approximately 12 per cent in real terms. Total FTE employment, including flow-on effects, are estimated to have fallen by 30 per cent between 2006-07 and 2010-11 whilst the estimated number of breeding sows decreased by only 8 per cent. While consolidation of farm enterprises, with resultant increased economies of scale, may account for some of the decrease in employment, it is also potentially a function of the survey coverage. However, the direct contribution from pig production to gross state product increased in real terms by almost 18 per cent.

9 Inflation adjustments have been made using the ABS implicit GDP price deflator.


AUSTRALIAN PORK

31

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South AustraliaWhen flow-on effects are taken into account, FTE employment in the pig production sector is estimated to have increased by approximately 33 per cent between 2006-07 and 2010-11. South Australia is the only state where the estimated number of breeding sows increased in the intervening period (a rise of 27 per cent). Similarly, when flow-on effects are taken into account, the contribution of pig production to the state’s gross state product grew by 70 per cent in real terms between 2006-07 and 2010-11, as a result of increased production and increased levels of purchasing within South Australia.

TasmaniaIn 2006-07 it was estimated that the pig production sector supported some 100 FTE jobs when flow-on effects are taken into account. In 2010-11 this number has fallen significantly to only 35 FTE jobs. Between 2006-07 and 2009-10, the estimated number of breeding sows more than halved in Tasmania and whilst preliminary data for 2010-11 suggests a recent increase, the overall numbers for the state are too small to be reliable at this stage. The total contribution to Tasmania’s gross state product has also declined significantly. There have been a number of media reports about pig farmers exiting the industry in Tasmania as a result of proposed legislation phasing out sow stalls.

VictoriaTotal FTE employment, including flow-on effects, are estimated to have increased by more than 60 per cent between 2006-07 and 2010-11, although this is mainly found in flow-on employment as a result of an increased proportion of total expenditure within the state as well as changes to the internal linkages in the Victorian economy. Over the same period, the estimated number of breeding sows decreased by 8 per cent. The apparent increase in employment during a period of declining numbers of breeding sows may also be a result of increased numbers of contract growers in Victoria.

Western AustraliaWhilst the data would suggest that FTE employment including flow-on effects resulting from the pig production sector fell by 45 per cent between 2006-07 and 2010-11, this is primarily influenced by the survey coverage. In the current survey, responses were received from producers representing 48 per cent of the estimated number of breeding sows in the state. The response rate in the earlier survey represented only 11.6 per cent of the number of breeding sows at that time. It is likely that the coverage in this current study, being more comprehensive, provides a better representation of the industry and encompasses larger producers, with greater economies of scale.The changes in the overall impact of the pig production sector, including flow-on effects, between 2006-07 and 2010-11 are illustrated in the table below.

Table 1: Changes on overall impact of the pig production sector between 2006-07 and 2010-11

Employment FTE Value Added

Australia

New South Wales

Queensland

South Australia

Tasmania

Victoria

Western Australia

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Whilst the industry has experienced some contraction in terms of number of breeding sows up to 2009-10, there are indications of expansion of the sector in 2010-11 when compared with the previous year. In general, the number of FTE jobs underpinned by the pig production sector has fallen but the contribution to gross domestic or state product has generally grown in real terms. This would suggest increased efficiency in the sector resulting from increased average size of enterprises with greater economies of scale.

It is not possible to provide a comparison of the impact of the processing sector as the earlier study only examined the impact of primary and secondary processing (combined) of domestically produced pig meat. This study has incorporated the impact of imported meat in the secondary processing sector.

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APPENDIX 2. METHODOLOGY

Assessing the economic impact of the pig production sectorAustralian Pork Limited (APL) provided the Western Research Institute (WRI) with a list of pig producers in Australia. The total number of breeding sows reflected amongst APL’s members approximates 95 per cent of the Australian Bureau of Statistics (ABS) estimate of the total in Australia (ABS Cat. No. 7111.0).

APL contacted all members prior to commencement of the survey to inform them of the purpose of the study. Subsequently WRI distributed a questionnaire, either electronically or by post, to each member. Survey recipients were contacted by telephone to encourage participation and provide assistance, where required, in completion of the questionnaire.

Overall, the number of breeding sows held by respondents to the survey reflected approximately 30 per cent of the national total. Table 1 summarises the distribution by state.

A comparison of the distribution of survey respondents by size of operation, measured in terms of number of breeding sows, with the distribution in the APL database is provided in Table 2.

Table 1: Proportion of breeding sows represented in survey responses

Proportion of breeding sows represented in survey responses

New South Wales 17.1%

Queensland 37.2%

South Australia 30.1%

Tasmania 26.7%

Victoria 28.2%

Western Australia 48.0%

Australia 29.7%

Table 2: Distribution of breeding sows by size of operation

No of breeding sows APL database Survey Respondents Response Rate

Less than 50 59.6% 49.7% 14.8%

50-100 13.0% 11.5% 15.7%

101-150 6.7% 5.8% 15.3%

151-200 4.5% 7.3% 28.6%

201-500 9.2% 11.5% 22.2%

501-1000 3.9% 3.1% 14.3%

More than 1000 3.2% 11.0% 54.3%

Total 100.0% 100.0% 17.7%

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The survey responses show an over-representation of larger producers (holding more than 1,000 breeding sows) and an under- representation of small producers with less than 50 breeding sows. This is not unexpected as many small producers contacted by telephone indicated a reluctance to complete the survey for a number10 of reasons. The overall response rate amongst pig producers was approximately 18 per cent but for producers with more than 1,000 breeding sows the response rate was in excess of 50 per cent. The overall response rate for Australia reflected a confidence interval of +/- 6.4% at the 95% confidence level.

The questionnaire sought data on the following for the 2010-11 financial year:

• Average number of breeding sows;

• Number of pigs sold;

• Revenue derived from sale of pigs by location and type of purchaser;

• Number of employees associated with pig production, including full-time, part-time and casual as well as unpaid employees such as family members. Pig producers with part-time and casual employees were asked to estimate the number of hours worked by these employees in order to convert employment to full-time equivalents;

• Total wages and salaries paid; and

• Expenditure associated with pig production by location and type of expenditure.

Data provided by respondents was aggregated by state with expenditure information distributed by that spent within the state in question and that classified as imports. This allocation means that the total impact measured for Australia as a whole is greater than the aggregation of individual states. The analysis nationally includes all expenditure made within Australia whereas purchases made by pig producers located in one state in another state are classified as imports.

Expenditure data was aggregated into one of 33 industry classifications using ABS 2006 ANZSIC coding. Total responses from the survey were scaled up to reflect the total number of breeding sows by state where applicable based on data from ABS Agricultural Commodities, Australia, 2009-10 (ABS Cat. No. 7121.0).

Assessing the economic impact of the pig processing sectorAPL provided WRI with a list of pig and pig meat processors in Australia, including both domestic and export abattoirs, meat wholesalers and smallgoods manufacturers. APL contacted all processors listed prior to commencement of the survey to inform them of the purpose of the study. Subsequently WRI distributed a questionnaire, either electronically or by post, to each organisation. Survey recipients were contacted by telephone to encourage participation and provide assistance, where required, in completion of the questionnaire. A number of processors were also visited during the course of the study.

The number of pigs slaughtered by the abattoirs responding to the survey approximated 57 per cent of all pigs slaughtered nationally in 2010-11 according to ABS data (ABS Cat. No. 7218.0.55.001). Processors were asked to provide similar data to that sought from pig producers including information on revenue derived by type of purchaser in order to prepare an estimate of the overall value of the pig production and processing chain.

Data provided by respondents was aggregated at the national level as analysis at a smaller area level had the potential to breach confidentiality. Expenditure data was aggregated into one of 33 industry classifications using ABS 2006 ANZSIC coding. Total responses from the survey were scaled up to reflect the total number of pigs slaughtered nationally where applicable based on data from ABS Livestock and Meat, Australia, (ABS Cat. No. 7218.0.55.001).

10 Reasons for not participating included lack of available financial information, pigs only produced for own use and pigs only sold to local contacts. In addition, several small producers indicated that they had already ceased to grow pigs or were intending to exit the industry in the near future. Others also noted that pig production was only a small component of their agricultural operation and that allocation of expenditure specifically to pig production was not possible.

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Description of the pork industryThe components of the various sub-sectors of the pork industry are as follows:

• Pig production – enterprises primarily engaged in pig farming and pig raising;

• Primary processing – slaughtering and boning of pigs. Applies only to domestically grown pigs and generates primary cuts and carcasses for secondary processing and direct sale;

• Secondary processing - further value adding through activities such as cooking, curing, brining, smoking, fermenting or slicing creating a range of products including hams, bacon, sausages and other smallgoods. Secondary processing also includes packaging of products. Secondary processing can utilise domestically produced pig meat, imported pig meat or a combination of the two; and

• Wholesaling - enterprises mainly engaged in the purchase and onselling, the commission based buying, and the commission based selling of goods, without significant transformation, to businesses.

Modelling methodologyIn this project WRI has used modified input-output analysis to estimate the economic impact of:

• The pig production sector on the Australian and state economies; and

• The pig processing sector on the Australian economy.

The impacts are measured in terms of gross domestic and gross state product, household income and full-time equivalent jobs. All impacts are measured in either dollar terms or full-time equivalent employment terms and as a percentage of the national or relevant state economy.

Inter-industry models can be used for economic impact analysis, to estimate the benefits or costs generated by new initiatives on each and every sector of an economy. For example, if there is a change in the purchasing or sales pattern of any industry, the flow-on or multiplier effects on upstream industries can be calculated. Simulating Impacts on Regional Economies (SIRE) analysis was used to estimate the economic impacts. Further details about SIRE analysis are provided in Appendix 3.

The application of SIRE analysis to estimate the contribution of the pig production and pig meat processing sectors to the economy involves four basic steps:

• Construction of appropriate national and state tables using the Generation of Regional Input-Output Tables (GRIT) technique;

• Analysis of the value of the sales and purchases of the sectors using data supplied by the producers and processors;

• Insertion of separate sectors representing the economic activities of the pig production and pig meat processing sectors; and

• Balancing of the tables using the RAS method.

In its original form the national input-output table constructed by the ABS contains a sector for “other livestock production” which includes pig production. However, this sector is not sufficiently differentiated to encompass the specific operations of pig farming. Similarly, the national table also contains a single sector encompassing meat and meat products manufacturing. That sector includes beef and sheep meat processing as well as poultry processing and bacon, ham and smallgoods manufacturing. Therefore the ABS table does not provide a satisfactory representation of the pig production or pig meat processing sectors, in its original form. To account for this deficiency, the information collected from the pig producers and pig meat processors has been used to create new sectors in the ABS national input-output table. These have then been subtracted from the relevant parent sectors to maintain the integrity of the table.

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The tables for this for this project have been constructed using the GRIT technique developed by Professor Guy West and Professor Rod Jensen of the University of Queensland. The GRIT technique, which uses both national Australian Bureau of Statistics data and local superior data concerning the industry in question, is the most reputable method of input-output table construction in the Australia and indeed elsewhere in the world. GRIT uses a series of non-survey steps to produce a prototype regional table from the national table, but provides the opportunity at various stages for the insertion of superior data. The system is “variable interference” in that the analyst is able to determine the extent to which they interfere with the mechanical processes by introducing primary or other superior data.

The GRIT system is designed to produce regional tables that are:

• Consistent in accounting terms with each other and with the national table;

• Capable of calculations to a reasonable degree of holistic accuracy; and

• Capable of being updated with minimum effort as new data becomes available.

The GRIT technique is essentially a hybrid method of deriving state and regional input-output tables from the national input-output table while at the same time allowing for the insertion of superior data (i.e. information collected from pig producers and pig meat processors) at various stages in the construction of the tables.

The use of SIRE analysis in the tables results in a more accurate estimate of the significance of the pork value chain than would be possible with traditional input-output analysis.

It is necessary to model each state individually as flow-on effects are influenced by the structure of the economy and industry linkages locally. A total of seven tables have been constructed for the pig production sector (New South Wales, Queensland, South Australia, Tasmania, Victoria, Western Australia and a national table) whilst the pig processing sector has been assessed at the national level only to ensure confidentiality of information.

Industry ClassificationsThe input-output tables used in this analysis are derived from the national input-output table which comprises 111 categories. The 2010-11 national and state tables have been aggregated to 32 categories based on the 2006 Australian and New Zealand Standard Industrial Classification (ANZSIC). The categories used in the tables are as follows:

Agriculture, Forestry & Fishing Construction

Coal & Oil Mining Wholesale Trade

Other Mining Retail Trade

Food, Beverage & Tobacco Product Manufacturing Accommodation & Food Services

Textile, Leather, Clothing & Footwear Manufacturing Transport, Postal & Warehousing

Wood Product Manufacturing Information Media & Telecommunications

Pulp, Paper & Converted Paper Product Manufacturing Financial & Insurance Services

Printing (including the Reproduction of Recorded Media) Rental, Hiring & Real Estate Services

Chemical & Chemical Product Manufacturing Ownership of Dwellings

Non-Metallic Mineral Product Manufacturing Professional, Scientific & Technical Services

Primary Metal & Metal Product Manufacturing Administrative & Support Services

Fabricated Metal Product Manufacturing Public Administration & Safety

Transport Equipment Manufacturing Education & Training

Machinery & Equipment Manufacturing Health Care & Social Assistance

Furniture & Other Manufacturing Arts & Recreation Services

Electricity, Gas, Water & Waste Services Other Services

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APPENDIX 3. SIRE METHODOLOGYEconomic modelling at the regional and small area level is restricted by model and data availability. Often, resource and time limitations preclude the construction of complex models such as computable general equilibrium (CGE) models, and in fact there are arguments to suggest that building a CGE model for a small region, while not invalid, may not be a very efficient use of resources in the context of the tradeoff between increased complexity and increased data ‘fuzziness’.

Input output modelling is usually used in such cases since it really provides the only practical option to planners. The assumptions of the input output model are concerned almost entirely with the nature of production. Inter-industry models are based on the premise that it is possible to divide all productive activities in an economy into sectors or industries whose inter-relations can be meaningfully expressed as a set of equations. The crucial assumption in the input output model11 is that the money value of goods and services delivered by an industry to other producing sectors is a linear and homogeneous function of the output level of the purchasing industry with supply being infinitely elastic.

This linearity assumption clearly lays simple IO models open to valid criticism. It implies a strict proportional relationship between input coefficients and output; for example, income coefficients are average propensities and employment coefficients reflect average labor productivity rates. In impact studies, this property can lead to an overestimation of the flow-on (multiplier) effects, particularly if the initial impacts are relatively modest. For example, many industries can increase output in the short term without corresponding proportional increases in wage costs and employment, particularly if there is slack capacity.

The SIRE model shares much of the structure of the conventional input output model. Total inputs are equal to intermediate inputs plus primary inputs (labour and capital). In the conventional input-output model, the inputs purchased by each sector are a function only of the level of output of that sector. The input function is assumed linear and homogeneous of degree one, which implies constant returns to scale and no substitution between inputs.

The SIRE model departs here from the conventional input-output model by a number of steps that a) replace sets of average propensities with corresponding marginal propensities (elasticities) within the model’s major linkages, and b) provide for changes in intermediate input coefficients as a function of relative price changes. There is room for variation between models and applications in the implementation and specifications of these linkages.

Primary InputsThe first step is to allow for non-constant returns to scale and substitution between primary input factors. Value added at factor cost is calculated based on marginal changes in output by industry. The value added elasticities are estimated econometrically for industry i using time-series data assuming a long-run equilibrium relationship between real value added at factor cost and total production.

The shares of wage (compensation of employees) and non-wage (gross operating surplus and mixed income) contributions to factor costs are assumed to be based on the same long-run relationship as that for total value added. The change in wage cost is then calculated from the marginal change in the share of wage costs in total factor costs. Gross operating surplus plus mixed income is calculated as the residual. The change in employment is calculated based on the average wage rate in each industry times the change in wages.

11 Input-output is a special case of inter-industry analysis. Inter-industry economics encompasses any methodology which takes into account the interdependence among the productive units of the economy. Input-output is only one of several methods for analysing these interdependencies.

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Household Consumption ExpenditureIn a similar manner to primary inputs, total household consumption expenditure is assumed to follow long-run equilibrium relationship between real consumption and income. Ideally, consumption expenditure should be a function of disposable income and the function should also include variables such as wealth, etc. In this simplified version of the model, income is taken as wage income.

To ensure consistency between the long-run and short-run relationships, the constraint should be satisfied which gives a long-run elasticity equal to unity. The estimated short-run elasticity of consumption with respect to wage income is 0.926. Individual commodity expenditures are expressed in terms of total expenditure and are assumed to be based on the same long-run relationship as that for total expenditure. The budget shares for each commodity should remain constant in the long-run but that the short-term fluctuations are possible as income changes. Industry sourced non-wage household income is included in the other value added component of primary inputs.

Intermediate InputsIntermediate input coefficients can vary because of substitution effects caused by relative price changes, or through changes in technology. Technology change is generally regarded as a long run phenomenon. Hence, in short run impact situations, price effects will be the major source of change.

The regional technology coefficient is the sum of the regional purchase coefficient and the regional import coefficient and industry output prices are a weighted average of industry local and import prices. Note that the regional direct requirements coefficients can change, even when industry technology is fixed, as a result of relative price changes.

Import SubstitutionThe price model can also be used to adjust the regional purchase coefficients by calculating the substitution effect between locally produced and imported purchases. In most impact situations at the regional level, it can be assumed that changes in local production will have no or negligible effect on import prices. The Trade Weighted Index provides the base level differential between the local and import price levels. In addition, when adjusting the regional purchase coefficients, a penalty function is applied as a surrogate for capacity limitations in the case where the local price decreases relative to the import price thus resulting in increased demand for the local product.

Model SolutionThe structural equations in this type of model cannot be solved analytically, because the input coefficients vary with the endogenous variables and thus also become endogenous. Hence, the solution procedure requires the use of an iterative recursive algorithm, such as the Gauss-Seidel method.

The operational performance of the model, compared to the conventional input-output model, is determined in part by the productivity gains, both labour and capital, experienced by industries as they expand. This results in reduced unit factor costs and local product prices. If import prices are assumed to be unaffected by local production, then the reduction in local prices relative to import prices will see a shift towards locally produced inputs, thus further stimulating local production. The extent of these additional flow-on effects will not only depend on the relative shifts in local and import prices, but also the elasticity of substitution between local and imported inputs.

This has implications for the results of this type of model, particularly if compared with those from the conventional input-output model. If price effects are ignored, then we would expect that, while the output multipliers and impacts may not be significantly different, income and employment impacts should be smaller because of the marginal coefficients associated with labour productivity. This is because many industries, especially those that are more capital intensive and can implement further productivity gains, can increase output, particularly in the short run, without corresponding proportional increases in employment and hence income payments. However, when price effects are incorporated into the model, the direction of change becomes less clear, since these potentially can generate compounding or offsetting changes. If the import substitution elasticities are inelastic, then this will reinforce the downward effects on multipliers, but if the elasticities are large (elastic) then the price effects offset the productivity gains and the multipliers and impacts could exceed those from the conventional input-output model.

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WESTERN RESEARCH INSTITUTEWRI is a regional development research organisation located in Bathurst, New South Wales. WRI holds a wealth of knowledge on employment, business development and investment issues affecting regional Australia. It has worked with Commonwealth, State and Local Governments and industry groups on numerous investment and development programs in regional areas. WRI has strong credentials in business and commercial market consulting and applied economic modelling including input-output analysis, shift-share, agribusiness and regional socio-economic surveys and analysis.

Mr Tom Murphy – Chief Executive OfficerBEc. (Hons I) MSc. (Econ) Lancaster

Tom is currently Chief Executive Officer of WRI and has held this position since its inception in February 1999. Under Tom’s leadership WRI has completed over 300 projects for all levels of government and government departments, industry groups, businesses, financial institutions, regional development boards and community groups, and educational institutions including universities, TAFE and schools in NSW, Victoria and Queensland.

Tom has previously held academic positions as senior lecturer in Economics and Director of the Regional Economics Research Unit in the Faculty of Commerce, Charles Sturt University, Bathurst and positions at the University of New England and Macquarie University. He has also held the positions of Economic Analyst with the Office of National Assessments in Canberra, with responsibility for the ASEAN economies and Senior Consultant with KPMG Peat Marwick Management Consultants.

Tom’s particular expertise is in regional economics and labour markets, and he has published in a wide range of economic subject areas in refereed and non-refereed articles, books and textbooks. Tom has a high local media profile in Western NSW for economic and social commentary and also features regularly on national radio particularly in connection to the quarterly agribusiness survey conducted for Westpac Australia wide.

Ms Lesley Arthur – Senior Research Officer BSc. Bio Sc (Hons), MSc Tech Ec.

Lesley is an experienced researcher with particular expertise in the areas of inter-industry modelling, including input-output analysis, statistical analysis, market analysis and forecasting. Since joining WRI Lesley has been involved in a diverse range of projects encompassing a variety of industry sectors. Her strengths are in strong analytical skills and in the preparation of concise reports. Prior to joining WRI, Lesley was a Director with KPMG Peat Marwick Management Consultants in Australia and Malaysia.

Ms Danielle Ranshaw – Senior Research Officer BEc&Fin NSW

Danielle’s experience in project management in the information technology sector combined with qualifications in economics and finance provides a solid background for WRI projects. With skills in systems design and development, Danielle has been able to extend WRI’s capability in developing robust and increasingly complex systems to support research fieldwork. Additionally, Danielle has extensive experience in business process analysis, performance planning and review, report writing and project planning.

Ms Dale Curran – Executive Officer BA ANU

Dale is responsible for all administrative processes at WRI including executive support, finance, management of the Board of Directors and maintenance of policies. She has worked in a variety of roles at WRI, including Fieldwork Supervisor and Research Assistant, and has worked on several community and business surveys. Dale brings a high level of organisational skill to her role as Executive Officer.

www.wri.org.auThe Flannery Centre, 341 Havannah Street Bathurst NSW 2795 ABN 76 090 089 991mail: PO Box 9374 Bathurst NSW 2795 phone: 02 6333 4000 email: [email protected]