Australian Farmed Rabbit Prospects for Industry Development

A report for the Rural Industries Research and Development Corporation by Max Foster, ABARE

August 1999 RIRDC Publication No 99/89 RIRDC Project No ABA-7A

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© 1999 Rural Industries Research and Development Corporation. All rights reserved. ISBN 0 642 57904 0 ISSN 1440-6845 Australian Farmed Rabbit – Prospects for Industry Development Publication no 99/89 Project no. ABA-7A The views expressed and the conclusions reached in this publication are those of the author and not necessarily those of persons consulted. RIRDC shall not be responsible in any way whatsoever to any person who relies in whole or in part on the contents of this report. This publication is copyright. However, RIRDC encourages wide dissemination of its research, providing the Corporation is clearly acknowledged. For any other enquiries concerning reproduction, contact the Publications Manager on phone 02 6272 3186.

Researcher Contact Details Max Foster ABARE GPO Box 1563 CANBERRA ACT 2601 Phone: (02) 6272 2095 Fax: (02) 6272 2318 Email: mfoster@abare.gov.au Website: http://www.abare.gov.au

RIRDC Contact Details Rural Industries Research and Development Corporation Level 1, AMA House 42 Macquarie Street BARTON ACT 2600 PO Box 4776 KINGSTON ACT 2604 Phone: 02 6272 4539 Fax: 02 6272 5877 Email: rirdc@rirdc.gov.au Website: http://www.rirdc.gov.au Published in August 1999 Printed on environmentally friendly paper by Canprint

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Foreword The emerging farmed rabbit industry in Australia is replacing the industry based on the harvesting of wild rabbits that collapsed with the release of rabbit calicivirus disease. While this industry has the important advantage over most other emerging industries of having a product that is already familiar to a significant number of consumers, it still faces many of the same challenges in becoming established. This report is aimed at providing a concise information guide on the nature and economic prospects of the Australian farmed rabbit industry to potential investors, researchers and policy makers. The report is a new addition to RIRDC’s diverse range of almost 400 research publications and forms part of our New Animal Products R&D program which aims to accelerate the development of viable new animal industries. Most of our publications are available for viewing, downloading or purchasing online through our website: • downloads at www.rirdc.gov.au/reports/Index.htm • purchases at www.rirdc.gov.au/pub/cat/contents.html Peter Core Managing Director Rural Industries Research and Development Corporation

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Acknowledgments The author thanks Terry Sheales and Roger Rose for helpful comments on various drafts of this report. He also thanks those in the farmed rabbit industry who generously gave of their time to provide information that was useful in preparing this report.

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Contents Foreword ........................................................................................................................ iii Acknowledgments...........................................................................................................iv Executive Summary...................................................................................................... vii 1. Introduction .............................................................................................................1 2. World rabbit market...............................................................................................2

2.1 World production............................................................................................2 2.2 World trade .....................................................................................................3 2.3 Prices and consumption ..................................................................................5

3. Australian rabbit industry......................................................................................7

3.1 Wild rabbit industry........................................................................................7 3.2 Farmed rabbit industry....................................................................................9

4. Factors affecting supply and demand..................................................................12

4.1 Demand for rabbit products ..........................................................................12 4.2 Supply of rabbit products .............................................................................13 4.3 Processing.....................................................................................................17 4.4 Price formation .............................................................................................17

5. Outlook for the Australian farmed rabbit industry...........................................18

5.1 Prices ............................................................................................................18 5.2 Consumption scenarios.................................................................................18 5.3 Potential for exports......................................................................................20 5.4 Other key threats...........................................................................................20 5.5 Enhancing the prospects ...............................................................................21

6. Conclusions ............................................................................................................25 Appendix A: The modeling framework.......................................................................26 Appendix B: Some other sources of information about rabbit farming ..................28 Appendix C: Statistics ...................................................................................................30 References ......................................................................................................................37

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Boxes Box 1: Rabbit calicivirus disease (RCD)...........................................................................3 Box 2: The Western Australian rabbit farming experience...............................................9 Figures Figure A: Trends in world production, trade and prices of rabbit meat............................2 Figure B: Shares in world production of rabbit meat: average 1994–98 ..........................3 Figure C: Shares in world exports of rabbit meat: average 1993–97................................4 Figure D: Shares in world imports of rabbit meat: average 1993–97 ...............................4 Figure E: World trade in live rabbits.................................................................................5 Figure F: Rabbit meat in the world meat market...............................................................5 Figure G: Estimated value of Australian wild rabbit products a.......................................7 Figure H: Volume and unit value of Australian rabbit meat exports ................................8 Figure I: Main export destinations for Australian rabbit meat: 1988-89 to 1994-95........8 Figure J: Size distribution of rabbit farms in Australia ...................................................10 Figure K: Various scenarios for consumption of Australian rabbit meat in 2004-05 .....18 Figure L: Notional Australian import prices for rabbit meat from China .......................21 Figure M: Trends in poultry meat consumption and prices in Australia.........................22 Figure N: Equilibrium of firm and industry in the long run............................................26 Tables Table 1: Summary statistics: farmed rabbit industry in Australia, 1998-99 .....................9 Table 2: How rabbit meat compares with other meats ....................................................12 Table 3: Nutrient requirements for rabbit feeds ..............................................................14 Table 4: Indicative annual cost of production of farmed rabbits ....................................15 Table C1: World production of rabbit meat: average 1994–98.......................................30 Table C2: World trade in rabbit meat: average 1993–97 ................................................31 Table C3: World trade in rabbit skins: average 1993–97................................................32 Table C4: Estimated supply and disposal of wild rabbit products in Australia ..............33 Table C5: Volume and value of Australian exports of rabbit meat, by destination ........34 Table C6: Volume and value of Australian imports of rabbit and hare pelts, by

destination................................................................................................................36

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Executive Summary The collapse of the wild rabbit industry that occurred in response to the release of the rabbit calicivirus disease (RCD) into the Australian environment has created the opportunity for the establishment of a farmed rabbit industry in Australia. The aim in this study is to examine the longer term prospects for Australia's emerging farmed rabbit industry. World rabbit industry In 1998 the world rabbit industry produced nearly 1 million tonnes of rabbit meat for

human consumption, an estimated 56 per cent from intensive rabbit farms, the remainder by traditional extensive means. Byproducts of meat production are pelts, and offal and offcuts that are used for pet food. Typically around 6 per cent of meat production enters world trade. China produces nearly one-third of world rabbit meat and provides over 40 per cent of world exports. The bulk of the

remainder of production and trade occurs in European countries, particularly Italy and France. Australian rabbit industry While around 500 permits have been issued by regulatory agencies in Australia to establish rabbit farms, at this stage there are only an estimated 115 commercial scale farms (loosely defined as having more than ten breeding does). At estimated production for human consumption of 106 tonnes dressed weight (84 000 rabbits) in 1998-99, the farmed rabbit industry in Australia is still only 2–3 per cent of the size of the wild rabbit industry in the first half of the 1990s. (The wild rabbit industry survives despite the impact of RCD and production of meat for human consumption in 1998-99 is estimated to be 72 tonnes dressed weight or 110 000 rabbits.) A small commercial rabbit industry has been established in Western Australia since legalisation in 1987. The virtual collapse of the wild rabbit industry and the lifting of prohibitions in New South Wales and Victoria in recent years has seen the establishment of rabbit farming in those states, but it remains prohibited in the other states and territories. Around three-quarters of Australia's production occurs in New South Wales where the industry is located mainly in the north west. The longer established rabbit farms in

World rabbit industry a

Production, rabbit meat: 960 000 tonnes Total exports: US$234 million b

Meat: US$201 million b Live rabbits: US$21 million b Pelts: US$12 million b

a Five year average to 1998. b Constant 1999 dollars. Source: FAO (1999)

Australian farmed rabbit industry, 1998-99 Production, rabbit meat: 106 tonnes a Farm gate gross value: $0.62 million Average farm gate price: $7.42 a rabbit a Number of farms, Australia: 115

New South Wales: 80 Victoria: 32 Western Australia: 3

Average farm size: 57 breeding does a Dressed weight.

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Western Australia have experienced some difficulty in making inroads into the domestic market because of high production costs. For an intensive 300 breeding doe farm — the maximum size that could be operated by one person — the cost of production in Australia in 1998-99 was estimated to be $6.44 a rabbit, around half of which was feed costs. At 1998-99 prices, it is estimated that this would yield an annual return to the labour and management of the operator of $20 963. Future prospects Reflecting long run costs of production, whole prices for farmed rabbit meat are projected to be around $7.50 a kilogram dressed weight in constant 1999 dollars ($7.10 for a 1.25 kilogram rabbit at the farm gate). However, overinvestment in production capacity could see prices driven down into the range of $5–6 a kilogram. It is projected that production of farmed rabbit meat in Australia will reach 692 tonnes dressed weight by the 2004-05, an average rate of growth of 31 per cent a year. All of this product will be sold on the domestic market. This projection assumes that there is growing awareness and acceptance of consumers of farmed rabbit meat as it becomes more readily available on the market. A pessimistic view of consumer acceptance would still see annual consumption of 344 tonnes dressed weight by the 2004-05. The main factor creating demand for farmed rabbit meat is that the Australian population includes an ethnic component, mainly a continental European one, which has a tradition of consuming rabbit meat. However, high production costs, stigmas among some sections of the population about rabbit meat, and strong competition from other white meats, particularly poultry, will limit the market inroads that farmed rabbit meat makes. The Australian farmed rabbit industry will have difficulty in the foreseeable future competing in export markets because its production costs make it uncompetitive by world standards. The main factors that are affecting the international competitiveness of Australian farmed rabbit meat are relatively high input costs, particularly labour, and the viral diseases that are deliberately released into the Australian environment to control wild rabbits. Indeed, there is some possibility that rabbit meat can be imported into Australia at competitive prices from low cost producing countries such as China. One factor that may be preventing this happening is the difficulty and cost of establishing import protocols for such a small market. In theory, rabbit meat can be landed in Australia from China at prices less than $4 a kilogram which is about half the price of local farmed rabbit meat. Chinese rabbit meat is already imported into the most discerning markets in Europe so quality is not at issue. The other key threat to the long run viability of the Australian farmed rabbit industry is the re-emergence of the wild rabbit industry. A small wild rabbit industry still operates in Victoria. However, while wild rabbit populations could rebound after the initial impact of RCD, it is thought unlikely that they will again approach levels that will make very large scale harvesting of wild rabbits viable.

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Industry prospects could be enhanced through research and development to increase productivity and through promotion to favourably alter the public perceptions of rabbit meat. There is an issue of whether industry-wide funding of generic promotion would be more effective in raising demand for rabbit meat than brand advertising.

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1. Introduction The European rabbit is a pest in Australia because of the environmental damage and loss of agricultural income that it causes. The costs of these are only slightly offset by the harvesting of wild rabbits for their meat and pelts. In Australia, the effectiveness since 1996 of the rabbit calicivirus as a biological agent for the control of wild rabbits has enhanced the profitability of farming rabbits under enclosed conditions. This, and the removal of some prohibitions on the keeping of rabbits, has led to the establishment of farmed rabbit industries in New South Wales and Victoria in recent years. To date, there has been steady demand for the products from farmed rabbits (mainly meat for human consumption). However, considerable uncertainty exists about the ultimate size of these markets and the returns that will be available. The aim in this report is to provide an overview of the Australian farmed rabbit industry and information on the industry’s future prospects. By providing this information it may be possible to avoid some of the pitfalls attendant with emerging industries — most notably, overoptimism about prospects and potential profitability. This report contains a snapshot of the current structure of the world and Australian rabbit industries and an assessment of the longer term outlook for farmed rabbit products. As well, a compilation of the available statistics relevant to the rabbit industry is provided as a statistical appendix.

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2. World rabbit market 2.1 World production Recorded world production of rabbit meat reached nearly one million tonnes in 1998 (FAO 1999) and it has been growing at an average annual rate of 2.5 per cent over the past forty years (figure A). There is probably also a large unrecorded production of rabbits, mainly through harvesting of wild rabbits, but also by householders. Niedzwiadek (1994) estimated that around 44 per cent of world rabbit meat production is produced using traditional extensive systems and the remainder from intensive rabbit farms. Figure A: Trends in world production, trade and prices of rabbit meat

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The main producers of rabbit meat are shown in Figure B. China accounts for 31 per cent, with the bulk of the remainder occurring in European countries, particularly Western Europe, and in Egypt (see also table C1 in appendix C). The top five producers account for 80 per cent of total recorded production. In Europe, rabbit farming can be a highly scientific and intensive process, with production units of up to 15 000 breeding does producing 600 000–700 000 rabbits for slaughter a year. Most are in the range 200–1000 breeding does but small backyard operations of 5–20 breeding does are also common (Lebas et al. 1986).

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Figure B: Shares in world production of rabbit meat: average 1994–98

China31%

France9%

Italy22%

Spain12%

Egypt6%

Other20%

Rabbit calicivirus disease (RCD) has been affecting world rabbit populations over the past fifteen years (box 1). This fatal and highly contagious disease (only of the so-called European rabbit), which was first reported in China in 1984, has now spread to other parts of the world. Its incidence in Europe accounts for the three year dip in world production around 1990. The leveling off in production in 1997 and 1998 reflects a serious and potentially fatal enterocolitic disease syndrome that has been affecting rabbits in a number of western European countries, particularly France. Box 1: Rabbit calicivirus disease (RCD)

Rabbit calicivirus disease (also called rabbit haemorrhagic disease) is an acute fatal disease in rabbits. It is highly contagious; as well as being spread by direct and indirect (secretions and excretions) contact between rabbits, the virus can also be spread by rabbit fleas and mosquitoes and, perhaps, by bush flies and birds. According to Cooke (1994), field studies of the impact of RCD on populations of rabbits in Europe suggest initial population reductions of at least 65 per cent and occasionally 90 per cent. For reasons not yet known, young rabbits are less susceptible to the disease (Williams et al. 1995). But in some countries such as Spain there has been a tendency for rabbit populations to at least partly recover after the initial impacts. Both rabbit calicivirus and myxoma pox virus (another fatal disease specific to rabbits and best known in Australia by its common name of myxomatosis) are deliberately released into the Australian environment as biological agents aimed at reducing numbers of wild rabbits. With farmed rabbits, vaccines are commercially available that give immunity to RCD. (It is illegal to vaccinate against myxomatosis using ‘live’ vaccines, because this could lead to immunity developing in the wild rabbit population, and ‘killed’ vaccines are not readily available.) 2.2 World trade Only about 6 per cent of world rabbit meat production enters world trade. China dominates the export trade with a share of over 40 per cent of the world total; the other main exporters are European countries (figure C and appendix table C2). The annual

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value of trade averaged US$182 million (US$201 million in constant 1999 terms) in the five years to 1997. Figure C: Shares in world exports of rabbit meat: average 1993–97

China a41.2%

Hungary15.7%

France8.7%

Other24.1%

Czech Republic3.5%Netherlands

6.8%

a Includes Hong Kong SAR.

The main importers of rabbit meat are higher income western European countries and Japan (figure D and appendix table C2). Figure D: Shares in world imports of rabbit meat: average 1993–97

Italy18.1%

France17.6%

Germany16.9%

Netherlands13.1%

Japan17.2%

Other17.1%

Annual world trade in live rabbits averaged US$18.6 million (US$20.6 million in constant 1999 dollars) over the five years to 1997, but has tended to be cyclical (figure E). Annual world trade in rabbit skins is worth US$11.2 million (US$12 million in constant 1999 dollars). The major exporters are China, France, Belgium-Luxembourg and the

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Czech Republic, largely the same as with rabbit meat exports. These countries, plus the United States, also figure prominently as importers (appendix table C3). Figure E: World trade in live rabbits

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2.3 Prices and consumption Since 1960, there has been no significant trend in world export prices of rabbit meat in constant 1999 dollars (figure A). This is in marked contrast to other white meats, such as poultry meat and pork, which show strong downward trends in response to productivity improvements. Based on FAO (1999) data, the average world export return for poultry meat, for example, has declined in constant dollar terms at an average annual rate of 2.4 per cent over the same period. That is, rabbit meat has been losing competitiveness in terms of price with most other meats and this has translated into some erosion of its market share over time (figure F). Figure F: Rabbit meat in the world meat market

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In traditional rabbit consuming countries such as France, rabbit meat wholesales at roughly double the price of poultry (see, for example, MHR Viandes 1999). This is mainly because the feed conversion rate to bodyweight with rabbits is only half that of chickens and that rabbit raising is twice as labour intensive as poultry production.

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3. Australian rabbit industry Prior to 1996, the Australian rabbit industry was largely based on the harvesting of wild rabbits but there was a small farmed rabbit industry based in Western Australia which began in the late 1980s. In recent years, the lifting of prohibitions on rabbit farming in New South Wales and Victoria has seen industries emerge in those states. The rabbit industry in Australia — both farmed and wild — is largely geared to production of meat for human consumption. Pet food (offal and offcuts) and pelts are byproducts of the processing stage. Manure can sometimes be a salable byproduct of the farmed rabbit production process. 3.1 Wild rabbit industry In 1996, Foster and Telford (1996) estimated the wild rabbit industry in Australia to be worth around $9 million a year ($9.4 million in constant 1999 dollar terms). Commercial wild rabbit production averaged around 1.365 million pairs (2.73 million rabbits) in the seven years to 1994-95 but collapsed after 1996 following the release of RCD and the subsequent decline in rabbit numbers in the wild. Meat for human consumption was the most valuable product of the wild rabbit industry but pelts and pet food were important byproducts (figure G). Average annual consumption of rabbit meat in Australia averaged 1900 tonnes a year dressed weight in the period 1988-89 to 1994-95. Virtually, the only use for the pelts in Australia was to produce felt for hat making. Akubra Hats Pty Ltd, a hat making company located at Kempsey, New South Wales, consumed the great bulk of the pelts for this purpose. Figure G: Estimated value of Australian wild rabbit products a

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a Average 1988-89 to 1994-95, in constant 1999 dollars. Source: Foster and Telford (1996)

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Reflecting the impact of RCD, Australian exports of rabbit meat virtually ceased after 1996 (figure H and appendix table C5).

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Figure H: Volume and unit value of Australian rabbit meat exports

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The relative importance in terms of value of the main export destinations for Australia’s rabbit meat exports over the seven years to 1995 is illustrated in figure I. European Union countries — mostly Portugal, France, the United Kingdom, Netherlands and Spain — accounted for nearly 50 per cent of the total value. Francophone countries — particularly Reunion, but also French Antilles, Seychelles and French Guiana — accounted for a further 23 per cent, reflecting the use of rabbit in French cuisine. Figure I: Main export destinations for Australian rabbit meat: 1988-89 to 1994-95

Portugal28%

Reunion19%United States

15%

United Kingdom7%

Other26%

France5%

The wild rabbit industry still survives in Victoria where there are two licensed processors with a combined throughput of 80 000–90 000 wild rabbits a year. Both these processors say that they have no problems finding markets for wild rabbit meat and are receiving $7–9 a kilogram per dressed rabbit. The two processors have also indicated that supplies are beginning to recover from the RCD induced downturn. It is also possible in many places to buy rabbit at butchers that have been supplied by 'weekend' shooters. All up in 1998-99, an estimated 110 000 wild rabbits (72 tonnes

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dressed weight), with a wholesale value of $440 000, were sold in Australia for human consumption. This is less than 5 per cent of average wild rabbit production in the first half of the 1990s. 3.2 Farmed rabbit industry A farmed rabbit industry was established in Western Australia in the late 1980s. According to Smetana (1993), the number of farms peaked at thirty in the early 1990s, producing around 30 000 rabbits for meat. But by the mid-1990s, the number of farms had dwindled to only five. According to Smetana, this was the result of high production costs, arising particularly from high mortality rates, and strong competition from the wild rabbit product that retailed at about half the price of the farmed product. In June 1999, there were only three commercial rabbit farms left in Western Australia. (More detailed reasons for the high dropout rate are discussed in box 2.) Box 2: The Western Australian rabbit farming experience

The leading producer, Gerrit van der Sluys of Konijnen Farm, and its sole processor of farmed rabbit meat, Bob Bray of Bray Family Abattoir, identified a number of reasons for the high dropout rate with rabbit farmers in Western Australia (personal communication, 4 June 1999). First, most operators were undercapitalised. According to van der Sluys, $240 000–300 000 is needed to fund a viable rabbit farming operation. In particular, there is a need for purpose–built sheds to overcome problems with heat stress and to have ventilation systems that can deal effectively with the ammonia that is a component of rabbit excreta. Second, few operators were prepared for the labour intensiveness of rabbit farming, in particular, the requirement to operate seven days a week. Third, there were initial problems in coming up with an appropriate feed ration. Initial attempts at feed formulations seemed to cause diarrhoea in the rabbits. This was causing 30–40 per cent rates of mortality with weaners (normal is 10–20 per cent), wastage of feed, and lengthened times in reaching marketable weights (Trott 1993). The collapse in 1996 of the industry based on the harvesting of wild rabbits led to a resurgence of interest in rabbit farming elsewhere in Australia. In New South Wales, 432 permits for commercial rabbit farming have been issued, of which 217 were to keep 50 rabbits or less; 108 to keep 51–100 rabbits; and 88 to keep over 100 rabbits (C. Vandermaal, NSW Agriculture, personal communication, 7 June 1999). Rabbit farming has been permitted in Victoria since 1998 and so far 44 permits have been issued. Rabbit farming is still not permitted in Queensland, South Australia, Tasmania or the Northern Territory. (The regulatory agencies in each state are the state government departments responsible for agriculture.) The nature of the farmed rabbit industry in Australia in 1998-99 is summarised in table 1. These data were compiled mainly from a survey in early June 1999 of rabbit processing outlets, key industry representatives and marketers of rabbit products. Table 1: Summary statistics: farmed rabbit industry in Australia, 1998-99

Item Unit New Victoria Western Total

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South Wales

Australia

Farm Number of farms a no. 80 32 3 115 Average size (breeding does) a no. 62 39 130 57 Sales to processors b no. 66 750 3 000 14 300 84 050 Farm gate price $/rabbit 7.17 9.03 8.25 7.42 Average carcass weight kg c 1.28 1.35 1.15 1.26 Gross value of production $'000 478 27 118 623 Wholesale Meat for human consumption – quantity tonnes c 85 4 16 106 – value $'000 612 33 148 793 – unit value $/kg 7.17 8.17 9.00 7.50 Meat for pet food – quantity tonnes 28 1 5 35 – value $'000 40 1 1 43 – unit value $/kg 1.41 2.00 0.25 1.24 Pelts – quantity tonnes 4 – 1 5 – value $'000 20 1 7 28 – unit value $/kg 5.40 5.40 9.00 6.01

a As at June 1999. b Includes ‘backyard’ kills. c Dressed weight. The dress out proportion with rabbits is assumed to be 50 per cent. (–) negligible. It is estimated that there are 115 commercial rabbit farms throughout Australia. The size distribution of these farms (number of breeding does) at the end of 1998-99 is shown in Figure J. The average farm size is estimated to be 57 breeding does but more than half of the farms have less than 50 breeding does. Figure J: Size distribution of rabbit farms in Australia

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The estimates of rabbit meat production for 1998-99 in table 1 are very low given the number and size of rabbit farms. This reflects a number of factors. First and foremost,

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mortality rates in flocks have been high as new farmers learn to manage both feed requirements and the range of diseases to which rabbits are prone. Second, with the industry currently in an ‘establishment’ phase, relatively large numbers of rabbits are being sold as breeding stock to start up producers. Australia was largely self-sufficient in rabbit pelts until the mid-1990s when an expansion in the hat making industry necessitated imports. In the three years to 1998-99, Australia imported an average 300 000 pelts a year at a price of just under 80 cents a pelt (see appendix table C6).

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4. Factors affecting supply and demand In this chapter, factors likely to be important determinants of supply and demand for rabbit meat and other rabbit products are identified, so as to form a basis for making judgments about the future prospects for farmed rabbit industry in Australia. 4.1 Demand for rabbit products Apart from its own price, demand for rabbit meat is assumed to be a function of the price of competing products, tastes and preferences, and consumer incomes. In Australia, wild rabbit meat has traditionally been low priced and generally regarded as being of inferior quality to other fresh meats. A key factor contributing to this view is that rabbit meat is remembered in Australia as a staple of the 1930s depression years, a time of high unemployment and low consumer incomes. Consequently, a basic aspect of the demand for wild rabbit meat is that much of it comes from low income earners, particularly pensioners. The second basic aspect of the demand for wild rabbit meat is that a substantial proportion of consumption is by various ethnic and cultural sections of the population, particularly those of European origin, who consider rabbit meat a delicacy. A key selling point with any rabbit meat is the perception of its relative healthiness compared to most other meats apart from chicken. It is an easily digestible, all white meat that is generally claimed to be higher in protein and lower in fat, energy and cholesterol than most commonly available meats (table 2). Of the other meats, it is closest in nutritional composition to poultry meat. However, based on data provided in Morriss (1999), the health advantages of rabbit meat compared with other meats can largely disappear if all are compared on the basis of raw meat trimmed of all visible fat. Table 2: How rabbit meat compares with other meats a

Meat type Crude proteins

Crude fats Energy Iron

g g kcal mg Chicken 19.5 12 200 1.5 Beef, lean 20 12 195 3.0 Mutton, lean 18 14.5 210 1.5 Pork, lean 17 21 260 2.5 Rabbit 21 8 160 1.5

a Values given per 100 grams of meat. Source: Lebas, Coudert, Rouvier and de Rochambeau (1986).

There are a number of attributes of farmed rabbit meat that could improve its perception by consumers compared with the wild rabbit product. The most important of these are likely to be: the risk of food borne disease is lower because farmed rabbits are slaughtered under

more hygienic conditions; and the meat is whiter and more tender and even in quality than wild rabbit meat, the

quality of which can depend on seasonal conditions.

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In the eyes of some consumers the drawback with farmed rabbit meat may be that it does not have the 'gaminess' that they find attractive with wild rabbit meat. There is limited empirical evidence of differences in demand characteristics for farmed versus wild rabbit meat. Smetana (1993) reported some limited evidence on the nature of competition between farmed and wild rabbit meat products using a Western Australian case from the early 1990s. He found that with farmed rabbit meat retailing at around $10 a kilogram and the wild rabbit product at around half that price, consumption of the farmed product was weak. He estimated that 16 800 farmed rabbits were sold for meat in 1992-93, compared with 125 000 wild rabbits brought in from South Australia. Farmed rabbit continues to sell at a premium to wild rabbit. For example, in early June 1999, 1.5 kilogram (dressed weight) farmed rabbit in carcass form retailed in the Prahran market in Victoria for $15–18. Wild rabbit with a dressed weight of around 650 grams sold for $6–7. In per kilogram terms, therefore, farmed rabbit was attracting a 10–20 per cent premium over wild rabbit. Farmed rabbit meat also competes closely in consumption with poultry meat because of the similarity in nutritional composition. Over the past five years, poultry meat in Australia has retailed at around $3 a kilogram in constant 1998-99 dollars and consumption in 1998-99 was an estimated 31.1 kilograms a person (ABARE 1999). In early June 1999, chilled farmed rabbit meat (in carcass form) retailed at more than three times the price of poultry meat (in frozen carcass form). 4.2 Supply of rabbit products Farmed rabbits are usually kept in individual wire cages that are ventilated and insect proof (because mosquitoes, rabbit fleas and other insects can carry myxomatosis and RCD). In Australia, rabbits must be kept in accordance with the Model Code of Practice for the Welfare of Animals — Intensive Husbandry of Rabbits (see Standing Committee on Agriculture 1991). The Code specifies factors such as minimum cage sizes, provisions for the supply of food and water, and procedures for correct handling and transport of rabbits. An important restriction on rabbit farming in Australia is that rabbits must be kept within rabbit-proof enclosures and are not permitted to ‘free range’. Rabbit farming is also subject to local government planning and development control guidelines (for New South Wales, these guidelines are reported in Watson and Stone 1999). In particular, rabbit farmers are required to provide environmental impact statements because of the effluent and odours that are produced. A detailed description of housing and equipment required for a commercial rabbitry is provided in Schoenian (1998). To reduce the risk of disease, sheds must be adequately ventilated. And because rabbits are susceptible to heat stress, Australian conditions often require cooling systems such as automatic water sprinklers on shed roofs.

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Apart from cages and sheds, the capital equipment requirements for rabbit farming are nest boxes, feeders, waterers (usually an automatic nipple-type water system) and cooling/heating systems. Mauer (1999) provides a discussion of the relative merits of the main meat rabbit breeds which are New Zealand White, Californian, Flemish Giant, Checkered Giant, Standard Rex, as well as various crosses of these. The main breed of rabbit employed in Australian rabbit farms is the New Zealand White breed. It is a medium sized rabbit with breeding and production qualities that include prolificacy, maternal performance and fast growth rate (Lebas et al. 1986). Cross breeding is practised to exploit hybrid vigour. The usual standard is that each doe produces eight litters a year or around 40 weaners that survive to be marketed. Weaners are usually ready for slaughter at between eleven and thirteen weeks when they weigh between 2.4 and 2.8 kilograms. Feed costs make up the bulk of the variable costs of producing rabbits. The least cost feed ration will depend on factors such as feed conversion rates, stage of the breeding cycle, and prices for the different feed ingredients that can be employed to produce a balanced diet. As a rough benchmark, 55–60 kilograms of feed is required for a doe and litter of eight to produce market sized rabbits. Commercial feed mixes for rabbits are usually provided in pellet form. From Shockey (1998), the nutrient requirements of rabbit feeds are summarised in table 3. Table 3: Nutrient requirements for rabbit feeds

Component Proportion of diet (dry weight basis) Energy (total digestible nutrient) 65% Protein (crude) 18% for gestating and lactating rabbits; 15% for growing

rabbits; 16–17% where total number of rabbits does not justify several different types of feed

Fibre (crude) 10–12% Minerals (macro) Calcium, 0.4; phosphorus, 0.22; magnesium, 0.035; potassium,

0.6; sodium, 0.2; and chlorine, 0.3 Minerals (micro) Copper, 3 parts per million (ppm); iodine, 0.2 ppm; iron, 50

ppm; manganese, 8.5 ppm; and zinc, 50 ppm Vitamins Supplementation of niacin, pyridoxine and choline may

improve growth and health of animals Source: Shockey (1998). Rabbits are prone to a range of viral, bacterial and parasitic diseases. The symptoms and controls for a wide range of diseases of rabbits are described in Lebas et al. (1986). The bacterial diseases, such as pasteurellosis and staphylococcus, are typically treated using antibiotics. The most common parasitic disease is coccidiosis, caused by a microscopic animal (protozoa). Arguably Australian rabbit farmers face a heightened viral disease problem relative to rabbit farmers in many other countries. This is because rabbit calicivirus and myxoma virus, are being deliberately released into the environment as control measures against wild rabbits. The cost of vaccinating against RCD is around $2 a rabbit and only

15

breeding does need to be vaccinated. There is lack of suitable vaccines for myxomatosis and rabbit farmers manage against this disease by insect-proofing their sheds and through prompt culling of rabbits that exhibit the disease symptoms. Commercial rabbits may be imported from any country for which disease status and veterinary administration status have been assessed by the Australian Quarantine and Inspection Service (AQIS) as being acceptable. Permission to import rabbits must also be obtained from the federal government department, Environment Australia. The complete conditions associated with importation are detailed in AQIS (1999). Imports of rabbits into Australia from the European Union, including the United Kingdom and the Republic of Ireland, have been suspended since 1997 because of the serious and potentially fatal enterocolitic disease syndrome affecting rabbits in a number of EU member states. According to Lebas et al. (1986), one person working 8 hours a day can manage a 250–300 breeding doe farm. Roughly 8 hours of labour is needed for each doe each year. It is estimated that a doe and her 30–40 kittens will produce around 0.25 cubic metres of manure a year. This represents a significant waste management problem but also a salable product to some. The composition of rabbit manure is around 1–2 per cent nitrogen and 5 per cent phosphate but this varies according factors such as the feed stuffs used and the stage of the rabbit production process. Worm farming or vermiculture is often carried out in conjunction with rabbit farming to efficiently manage the disposal of manure. The product of worm farms, worm castings, is a soil–enhancing agent much sought after by gardeners. Vermiculture is practised in the Western Australian rabbit industry. 4.2.1 Indicative cost of production Estimates for Australia of the cost of production with a well managed and intensive rabbit farm of 300 breeding does are shown in table 4. The rabbit production parameters are drawn from Lebas et al. (1986) and Trott (1993). Prices for rabbits and feed are based on 1998-99 averages. Revenues from on–farm byproducts of rabbit meat production, such as fertiliser, are assumed to be negligible. The total cost of production — defined as fixed costs plus variable costs but not including operator labour costs — is estimated to be $6.44 a rabbit. Feed costs make up about half of total costs and over 90 per cent of variable costs. Estimated net revenue from the farm, representing a return for the labour and management of the operator, is nearly $21 000. This is 8 per cent less than the Federal Pastoral Award rate in 1998-99 for an operator/manager which was $22 700. It implies that the return to capital invested in the rabbit farming operation is very low. Table 4: Indicative annual cost of production of farmed rabbits

Unit Value a

16

Breeding period Mature does no. 300 Does per buck no. 8 Mating acceptability % 70 Conception rate % 60 Litters per doe per year no. 7.5 Live born per litter no. 7.5 Mortality, birth to weaning % 20 Weaned rabbits per litter no. 6 Weaned rabbits per year no. 13 500 Age at weaning days 30 Average weight at weaning kg 0.5 Total feed intake/kg weaned rabbit kg 4.3 Feed requirements, bucks and does g/day 150 Culling rate % 33 Growth period Liveweight gain g/day 35 Mortality % 10 Age at marketing weeks 12 Liveweight kg 2.39 Feed conversion rate g/g 3.25 Feed requirements tonnes 126 Feed cost (pelleted) $/tonne 315 Revenue $ 90 153 Rabbits sold b no. 12 150 – farm gate price $/rabbit 7.42 Capital requirements Building and land ownership $ 200 000 Equipment $ 40 000 Costs Variable costs, total $ 42 482 Feed $ 39 782 Veterinary $ 1 200 Electricity $ 500 Other variable costs $ 1 000 Fixed costs, total $ 26 708 Interest $ 19 200 – interest rate % 8.00 Depreciation c $ 6 500 Insurance, rates $ 1 000 Total costs $ 69 190 Per rabbit marketed – variable cost $/rabbit 3.50 – fixed cost $/rabbit 2.20 – total cost $/rabbit 5.69 Net revenue $ 20 963

a Production parameters are drawn from Lebas et al. (1986) and Trott (1993). b Includes culled bucks and does. c Assumes 40 year lifetimes for buildings and 10 year lifetimes for equipment. The estimates in table 4 should be treated as indicative only. Rabbits are produced under a range of circumstances in Australia. For example, many rabbit farmers probably do not farm as intensively as to produce 7–8 litters per doe a year. And many will also

17

have lower capital costs through adapting existing buildings rather than building specialist ones. The performance parameters in table 4 are reasonably representative of current best practise in Australia. If the farmed rabbit industry in Australia was to achieve the same level of productivity that the French industry did in 1997, the number of rabbits sold per doe would need to increase to around 46 with a ratio of total feed use to total rabbit meat sold of 3.85 (Guerder 1999). (This compares with 40.5 and 4.35, respectively, assumed in table 4.) Such productivity levels would imply average net revenue to an Australian rabbit farmer of $33 600, equivalent to a 4.6 per cent return on capital. 4.3 Processing Processing of rabbits is often undertaken in poultry processing plants but there are some rabbit specific processing plants, usually run in conjunction with a rabbit farm. So-called ‘back yard kills’ for commercial sale are prohibited under laws governing meat processing standards. In 1998-99, the killing and basic processing fee was around $2 a rabbit. In some cases, there is a second stage of processing to produce packs of rabbit pieces or value added products such as sausages or kebabs. The offal and offcuts are sold mainly for pet food but sometimes to manufacturers of blood and bone fertiliser. The pelts are used mainly in felt making. It is usually necessary to dry and stretch the pelts on a wire frame before they are sold. However, pelts from farmed rabbits are considered to be greasy and fatty compared with pelts from wild rabbits. As well, farmed rabbit pelts are usually white, whereas the wild rabbit is a natural brown colour that better suits hat fashions. These factors mean that farmed rabbit pelts are less preferred than wild rabbit ones in the felt making process. 4.4 Price formation As discussed in more detail in appendix A, the long run equilibrium price for rabbit meat in Australia is expected to follow fairly closely the cost of production. It may be that the relevant cost of production is that of an overseas producing country if it is cheaper to import rabbit meat rather than to produce it in Australia. It is possible that farmed rabbit meat prices will come down over time as productivity improves. Factors contributing to this increased productivity are gains in knowledge in areas such as disease control and genetic improvement in livestock.

18

5. Outlook for the Australian farmed rabbit industry 5.1 Prices In the period to 2004-05, wholesale prices for farmed rabbit meat in Australia are projected to remain at around $7.50 a kilogram dressed weight in constant 1999 terms. This equates to around $7.10 a rabbit, assuming a killing fee of $2 a rabbit and an average dressed weight of 1.26 kilograms. This projected price broadly reflects the cost of production for new firms entering the industry. (For more details, see Table 4 and the discussion about price formation in appendix A). However, overinvestment in rabbit farming capacity could see the wholesale price driven down into the range $5–6 a kilogram dressed weight ($5.70 a rabbit), as prices more closely reflect variable costs of production rather than the full cost (which also includes fixed costs). 5.2 Consumption scenarios There are a number of uncertainties associated with the demand outlook for the farmed rabbit industry. These are mainly the degree of acceptance of farmed rabbit meat and the extent of competition from the wild rabbit industry. To reflect these uncertainties, a simple consumption model was used to assess the outlook to 2004-05 under a number of different scenarios. These assessments are summarised in figure K. The nature of the consumption model is outlined in appendix A.

Figure K: Various scenarios for consumption of Australian rabbit meat in 2004-05

2 5 106

104 1

6 92

34 4120

0

500

1000

1500

2000

Base (1989-90to 1994-95)

1998-99 Perfectsubstitutability

Most likely Limitedconsumeracceptance

Re-emergence ofwild rabbitindustry

Scenario

Wild

Farmed

kt

5.2.1 ‘Perfect substitutability’

19

With this scenario, it is assumed that farmed rabbit meat is perfectly substitutable with the wild rabbit product and that the stock of preferences for rabbit meat has not eroded since the release of RCD. That is, the projection is simply made by taking the level of consumption of rabbit meat in the base period, 1989-90 to 1994-95, and adjusting it according to projected changes in income and prices for rabbit and poultry meat in 2004-05. It is projected that the higher average price for rabbit meat would cause rabbit meat consumption to decline by 42 per cent compared with the base period, to 1040 tonnes. This would still be a tenfold increase on the 1998-99 level. This represents an optimistic scenario. The evidence from 1998-99 is that many consumers have got out of the habit of looking for rabbit meat in the market place or are deterred by perceptions of the disease risk to humans from RCD (even if there is no scientific evidence to support this view). 5.2.2 ‘Most likely’ With the most likely scenario it is assumed that farmed rabbit meat is closely substitutable with wild rabbit meat but not perfectly so. Other key assumptions with this scenario are that RCD continues to be effective in restraining wild rabbit populations at current levels and that there is growing awareness and acceptance by consumers of farmed rabbit meat as it becomes more readily available on the market. It is projected that domestic consumption of farmed rabbit meat will reach 692 tonnes by the year 2004-05, a 650 per cent increase on the level of 1998-89. 5.2.3 ‘Limited consumer acceptance’ The assumptions for this scenario are the same as the ‘most likely’ scenario, except that consumer awareness and acceptance of farmed rabbit meat is now assumed to be limited because of a perception that rabbit meat is a low quality meat. Under this scenario, consumption of farmed rabbit meat is projected to be 344 tonnes dressed weight by 2004-05, about half that with the ‘most likely’ scenario. 5.2.4 ‘Re-emergence of the wild rabbit industry’ A key threat to the farmed rabbit industry is the re-emergence of the wild rabbit industry. Rabbit calicivirus has decimated wild rabbit populations in the central arid regions of Australia that have been the traditional sources of supply. But it has been less effective in reducing populations in the higher rainfall areas that are closer to the coast. However, even though rabbit calicivirus has not completely eliminated rabbits in Australia, in most previous producing regions it has reduced wild rabbit population densities to well below the economic levels for harvest. Another factor militating against the re-establishment of a wild rabbit industry is the new Australian Standard for the Hygienic Production of Game Meat for Human

20

Consumption (see SCARM 1997). This applies to the production for human consumption of products derived from wild animals and birds killed in their natural environment. Clarke (1999) believes that these standards will increase the cost of processing wild rabbits. There is a possibility that wild rabbits will eventually develop resistance to the RCD and, as a consequence, rabbit populations will recover. However, after four years of exposure to the disease in Australia, there is no evidence of this resistance developing. A recovery in rabbit populations to pre-RCD levels implies a price in 2004-05 of around $3.26 a kilogram (in constant 1999 dollars) for wild rabbit meat. It is projected that, if this were to occur, the consumption of farmed rabbit meat would slump to around 120 tonnes dressed weight by 2004-05 and average farm gate prices to only $5.00 a rabbit. The probability of this scenario occurring, however, is considered to be slight over the foreseeable future. 5.3 Potential for exports The Australian rabbit industry will face a great deal of difficulty in establishing export markets for rabbit meat because its prices are uncompetitive by world standards. The main factors contributing to this uncompetitiveness are the relatively high costs of inputs, particularly labour, and the disease environment. A study of potential export markets for Australian farmed meat by Smetana (1990) concluded that small consignments of premium grade product may be possible to countries such as the United States but the scope was limited. 5.4 Other key threats Apart from the re-emergence of the wild rabbit industry there are a number of other threats to the long run viability of the farmed rabbit industry. 5.4.1 Import competition Current (and projected prices) for rabbit meat in Australia are well above world prices, which suggests that imports of rabbit meat are possible. In figure L is shown a notional time series of landed import prices in Australia for frozen rabbit meat from China, constructed assuming a freight rate of 45 cents a kilogram (in constant 1999 dollars). This series suggests that the average import price would average around $3.80 a kilogram in constant 1999 dollars but could fall as low as $2.75 a kilogram in some years. Chinese rabbit meat is routinely imported by some of the most discerning markets in Europe so quality is unlikely to be a problem. However, the Australian Quarantine and Inspection Service (AQIS) has set no protocol that specifies the sanitary and phytosanitary requirements that rabbit meat imports must satisfy to gain entry to Australia. The establishment of a protocol is only undertaken if there is sufficient

21

interest from importers and it involves a formal assessment of the risks associated with the import of the product in question. The small size of the Australian market for rabbit meat makes it unlikely that an importer will go to the trouble of getting a protocol established. That is, although imports of rabbit meat into Australia cannot be ruled out, the possibility seems remote. Figure L: Notional Australian import prices for rabbit meat from China

0

2

4

6

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

$/kg

Import price (in constant 1999 dollars)

5.4.2 Animal rights and welfare There are growing animal rights and welfare movements, both internationally and in Australia, that could influence the future prosperity of an intensive livestock industry like the farmed rabbit one. There is already considerable pressure being exerted on the poultry meat industry. For example, in June 1999 the European Union effectively banned battery production of chickens by requiring that by the year 2012, the space allocated to each caged hen must increase from 450 square centimetres to 750, or the birds must be free range. 5.4.3 Food safety concerns Like most meats, rabbit meat can carry a range of diseases that pose health risks to human beings. The most important of these in the Australian context are salmonellae and campylobacters that can exist in the intestinal tract of rabbits. The perception of consumers that farmed rabbit meat is a safe food is important in maintaining demand. At this early stage of development of the farmed rabbit industry, even isolated food poisoning incidents with rabbit meat could jeopardise the reputation of rabbit meat as a safe product and therefore the viability of the industry. 5.5 Enhancing the prospects 5.5.1 Learning from the poultry meat industry

22

The poultry industry – an intensive livestock industry with many similarities to the farmed rabbit one – has some important lessons for the farmed rabbit industry in how to enhance productivity and market a meat product. The poultry meat industry in Australia (and indeed the world) has been very successful in lowering the price of its product and gaining market share. Consumption per person of poultry meat in Australia has increased from 4.4 kilograms a person in 1957 to around 32 kilograms a person in 1999 (figure M). One factor that has enabled this increase in market share has been declining prices that result from productivity improvements, mainly the intensification of the production process. Another factor is that the poultry meat industry has provided a range of value added products that are processed for consumers' convenience. Poultry meat consumption has also benefited from health related concerns, such as the perceived high cholesterol content of red meats. Figure M: Trends in poultry meat consumption and prices in Australia

0

5

10

15

20

25

30

35

1960 1965 1970 1975 1980 1985 1990 1995

0

200

400

600

800

1000

1200

kg c/kg

a Average retail price of frozen chickens (weighted by production) in state capitals in constant 1999 dollars.

Retail price a

Consumption per person

The establishment of the Australian poultry industry benefited from restrictions on the import of poultry meat that were imposed because of the risk of introduction of exotic diseases. These restrictions were relaxed in 1998, but still only allow imports of cooked and deboned chicken meat under very strict sanitary and phytosanitary conditions. [Australia has become an exporter of poultry meat in recent years but the quantities involved are small (2 per cent of production in 1998-99)]. The poultry meat industry also provides some lessons on why the Australian rabbit meat industry will have difficulty breaking into export markets. Fairbrother (1996) listed some of the disadvantages that Australian poultry meat producers face compared with their international competitors as being: not able to benefit from same scale economies;

higher capital and labour costs;

23

higher feed costs, especially during drought; and no production subsidies.

Marketers of farmed rabbit meat could emulate the poultry meat industry in some respects. For example, marketers could have contractual arrangements like those in the poultry industry whereby they provide rabbit farmers with superior breeding stock, animal medicines and feed stuffs, while the rabbit farmers provide the production facilities and the labour. At least one marketer in Victoria already has plans along these lines. 5.5.2 Research and promotion It is reasonable to ask whether the prospects for the farmed rabbit industry could be enhanced by coordinated industry wide research or promotion programs. A number of rural industries have research programs part financed by Commonwealth government imposed levies and managed through the Commonwealth’s Rural Research and Development Corporations, including RIRDC. A number of industries, including beef, lamb and pig meat industries, also operate levy funded promotion schemes The generally accepted economic basis for government intervention in industry research and development is that much of the knowledge generated by research can be characterised as a public good — that is, the results of research are widely applicable and the benefits are not always appropriable by private investors. There is then a policy tension or conflict between maximising the benefits from research through the wide dissemination of results and enabling private investors to restrict the use of the results so they have sufficient incentive to undertake the research. Rabbit farms are mostly small and there appears to be a rapid turnover of operators in the industry. The small size of operations is likely to limit the capacity of individual farmers to fund or carry out research. It may also be difficult for private research providers to capture a significant part of the benefit of research given the dispersed set of small operators. So individual farmers or specialist private research providers may not have sufficient incentive to carry out research that may be of potential net benefit to the industry as a whole. The industry produces a generic commodity in apparent competition with wild rabbit and other meat commodities. Thus it is less likely that individual producers will be able to capture the full benefits of any product improvements that they make than it would be if the industry was characterised by production of a series of specialised products. Most of these characteristics suggest that there could be some potential gains from industry wide coordinated research and dissemination of research results. This can still leave opportunities for larger producers to fund research privately with the possibility of holding the results of at least some research as private goods. (Breeding advances or improved feed formulations are examples of where private research could deliver realisable benefits to those who fund it.) In many cases, the private benefits may be in the form of being able to use the results for several years before they seep through to other operators.

24

The rapid turnover of farmers may lead to a continual erosion of management skills and knowledge, leaving a gap that could potentially be filled by a coordinated industry research and dissemination strategy. While the existence of such a knowledge gap would ensure a demand for information, the rapid turnover of operators may mean the gains from satisfying that demand would be ephemeral. With promotion, the issue is whether generic promotion is more effective than brand advertising in raising demand for farmed rabbit meat. The legislated arrangements for government arranged promotion of agricultural commodities in Australia are generally aimed at generic promotion, which is a collective marketing strategy aimed at increasing the total demand for the product (Kaiser and Liu 1998). A firm in these industries may also undertake brand advertising aimed at increasing its market share through differentiating its product in the eyes of the consumer. Brand advertising can take the form of a number of industry participants banding together to guarantee that rabbit meat sold under a particular brand meets certain quality standards — that is, it involves a sort of certification process. It is of note that poultry meat has never been promoted through compulsory schemes in Australia; branded promotion has always been the way. A factor that should be taken into account in planning any coordinated efforts is that the cost of levy raised finance would be high given the small size and rapid turnover that characterises the industry. 5.5.3 Selling through the supermarket chains Being able to sell rabbit meat through the large supermarket chains in Australia would be a major boost to demand for rabbit meat. The supermarket chains are already the main outlets for poultry meat, accounting for 75 per cent of total sales in 1998 (Retail World, 14 December 1998, p. 79). At the moment, selling to the supermarkets is not necessary because restaurants, butchers and delicatessens can readily absorb existing levels of supply but it probably becomes an imperative if the industry is to expand to its potential. To sell to the supermarket chains, organisations in the production, processing and distribution chain for farmed rabbit meat need to be able to demonstrate that their practices are adequate in terms of delivering safe food. According to Morley (1997), this is an absolute prerequisite for doing business with the supermarkets; they demand 'trace back' as a means of being able to guarantee food safety to consumers. Food safety programs administered by statutory authorities are mandatory for all meat processing establishments in Australian. But there has been some move in recent years toward more self-regulatory arrangements whereby producers and processors are more responsible for product safety, quality and the meeting of customers' requirements. The farmed rabbit industry may be able to enhance the demand for its product by ensuring that its product meets acceptable safety standards through education of producers about appropriate on-farm practices such as the use of antibiotics.

25

6. Conclusions The main conclusion of this analysis is that a small farmed rabbit meat industry in Australia, based on serving the domestic market, is likely to be sustainable in the longer term. Nevertheless, the labour and knowledge intensiveness of rabbit farming means that many startup farmers will not be successful. This was the case in the early days of the establishment of the Western Australian industry. Like Smetana (1990), the conclusion of this analysis is that the likelihood of the Australian farmed rabbit industry becoming a significant exporter in the foreseeable future is slight. The main factor militating against the international export competitiveness of Australian farmed rabbit meat are high input costs compared with some key producing countries. The key threat to the long run viability of this industry is the re-emergence of the wild rabbit meat industry based on the scale that it operated before the release of RCD. At this stage, such a re-emergence is not considered likely especially when account is taken of the continued virulence of RCD and myxomatosis. There is also the possibility of import competition, though this is assessed to be slight because the cost of establishing import protocols is not justified given the small size of the market. It is possible that the Australian farmed rabbit industry can enhance its productivity and the attractiveness of its product to consumers through some well targeted funding of research and promotion. There is an issue of whether generic promotion funded by the industry as a whole would be more effective in raising demand for rabbit meat than brand advertising by individual firms.

26

Appendix A: The modeling framework A.1 Long run equilibrium of prices and quantities Given that, in those states that permit the farming of rabbits, there is little to restrict entry into (or exit from) the industry, the rabbit meat industry can be regarded as operating in a competitive market. This means firms produce at their long run minimum average cost, earning just normal profits. Firms that do not produce at long run minimum cost will not be able to compete in the long run; above normal profits will attract entrants to the industry. This situation is illustrated as the minimum point of the long run average cost (LAC) curve in the ‘Firm’ panel of Figure N (based on Koutsoyiannis 1979). All firms in the industry have the same minimum long run average cost. However, as Koutsoyiannis discusses, this does not imply that all firms are the same size or have the same efficiency. The more efficient firms employ more productive factors of production and/or more able managers. It is competitive movements in factor prices that ensure that long run average costs are equilibrated between firms in the industry.

Figure N: Equilibrium of firm and industry in the long run

Price

Quantity

Price

Quantity

Industry Firm

S0D0

P0

Q0

P=MR

LAC

LMC

X

This minimum point of LAC in the ‘Firm’ panel in Figure N equates with P0, the point at which industry demand is equated with industry supply in the ‘Industry’ panel. The long run equilibrium level of consumption is Q0. Productivity improvements would lead to downward shifts in the LAC curve, a lower long run equilibrium price and higher consumption. A.2 Consumption model The substitution possibilities in consumption of a product are usually represented in terms of elasticities. (An elasticity shows the responsiveness of consumption to changes in the value of the variable in question.) There is virtually no information available on

27

such elasticities for rabbit meat in Australia and data limitations preclude their estimation. Therefore, the elasticities used in this analysis are broadly based on those that are known for other meat types and are conditioned by restrictions implied by demand theory (see, for example, Varian 1984). The consumption equation for farmed rabbit meat was specified as: (1) ypppq t

pt

wt

ftt 2.015.045.08.0 +++−=

where, at year t, p f

t is the percentage change in annual consumption of farmed rabbit meat; pw

t is the percentage change in the price of wild rabbit meat; p pt is the percentage

change in the price of poultry meat; and yt is the percentage change in real gross domestic product in Australia. From equation (1), the own price elasticity of farmed rabbit meat is –0.8 and the cross price elasticities with respect to wild rabbit meat and poultry meat are 0.45 and 0.15, respectively. Income elasticity is assumed to be 0.2. The own price and income elasticities are those for poultry meat in Australia reported in Harris and Shaw (1992). Cross price elasticities were selected to reflect judgments of the relative importances of each meat type as a substitute for farmed rabbit meat, and to satisfy homogeneity restrictions.

28

Appendix B: Some other sources of information about rabbit farming The following are some sources of information, in addition to the list of cited references. As with the references, many of these information sources can be accessed via the Internet. International

Organisation/ source

Nature Contact details

World Rabbit Science Association

An international association created in Paris in 1976 to promote the development of the world rabbit industry through the exchange of information.

F. Lebas Secretary, WRSA Station de Recherches Cunicoles INRA BP 27 31326 CASTANET -TOLOSAN Cedex France Fax : +33 (0)5 61 28 53 19 e-mail: lebas@toulouse.inra.fr http://www.rabbit-science.com

American Rabbit Breeders Association (ARBA)

An organisation dedicated to the promotion, development and improvement of the domestic rabbit.

P.O. Box 426, Bloomington, IL 61702 Fax: +01 309-664 0941 e-mail: arbapost@aol.com http://members.aol.com/arbanet/arba/web/

Ardeng Rabbit Meat Commercial rabbit farm with online information on rabbit raising and product presentation.

268 Hill Top Drive Fountain Inn, South Carolina 29644 Phone/Fax: +01 864-862 5026 e-mail: deang@ardengrabbit.com http://www.ardengrabbit.com/

Commercial Rabbit Industries An internet web site provided by Mr Pat Lamar, who served as Chairperson of the Commercial Department Committee for the American Rabbit Breeders Association (ARBA) for several years. The site has been developed specifically for providing information on the many commercial aspects involved in raising rabbits.

e-mail: fuzyfarm@3-cities.com http://www.3-cities.com/~fuzyfarm/

The Rabbit Web An internet site that draws together a number of links to sites of interest to rabbit farmers. The purpose of the Rabbit Web, is to promote all uses of rabbits. Included is a link to an excellent ‘Message Board’ where questions and answers about rabbits can be posted by e-mail.

e-mail: rabbits@tcims.com http://www.rabbitweb.net/

Australia

29

Organisation

Nature Contact details

Associations/cooperatives

Commercial Rabbit Breeders Association Inc.

Publishes ‘Thumper’, a rabbit industry newsletter.

Mr Graeme Fullerton 'Bundabah' Pacific Highway Tea Gardens NSW 2324 Tel: (02) 4997 3112

Victorian Gourmet Rabbit Producers Association

Mr Eric Graae Tel: (03) 56780388

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Appendix C: Statistics

Table C1: World production of rabbit meat: average 1994–98

Country Slaughter Average carcass weight

Production

Quantity Share of total no. kg tonnes % Africa 74 476 1.19 88 280 9.2 Algeria 7 000 1.00 7 000 0.7 Egypt 59 841 1.20 59 842 6.2 Réunion 2 700 1.20 3 240 0.3 Asia 212 746 1.39 295 812 30.8 China 208 035 1.39 288 200 30.0 Korea, Republic of 682 2.00 1 364 0.1 Commonweath of Independent States a

Russian Federation 7 760 1.60 12 420 1.3 Ukraine 9500 1.60 20 200 2.1 Eastern Europe 42 541 1.57 66 874 7.0 Czech Republic 20 200 1.71 34 610 3.6 Poland 4 020 1.21 4 860 0.5 Romania 2 700 1.51 4 072 0.4 Hungary 8 622 1.37 11 836 1.2 Slovakia 3 519 1.60 5 626 0.6 Western Europe 318 539 1.44 457 460 47.7 European Community (15) 316 959 1.44 455 435 47.5

Austria 520 1.65 860 0.1 France 59 510 1.50 89 262 9.3 Germany 21 200 1.60 33 920 3.5 Greece 3 300 1.52 5 000 0.5 Italy 140 420 1.50 210 680 22.0 Spain 92 009 1.26 115 713 12.1

Switzerland 1 042 1.17 1 218 0.1 South America 13 876 1.23 17 080 1.8 Argentina 6 400 1.10 7 040 0.7 Brazil 2 160 1.50 2 160 0.2 Other 2 463 0.56 1 378 0.1 World 684 580 1.40 959 503 100.0

a Some countries of the Commonwealth of Independent States are included in the ‘Asia’ category. Source: FAO (1999).

31

Table C2: World trade in rabbit meat: average 1993–97

Country Exports Imports Volume Unit

value Value Volume Unit

value Value

tonnes US$/kg US$'000 tonnes US$/kg US$'000 Africa 3 4.13 12 302 2.56 772 Réunion 0 3.00 1 296 2.55 756 Asia 24 692 2.02 49 953 4 408 2.03 8 968 China 24 629 2.02 49 849 3 1.23 4 Japan 0 0 0 4 194 1.98 8 296 Korea, Republic of 4 2.00 8 119 2.10 249 Central America and Caribbean

- - - 129 2.68 346

Eastern Europe 12 914 3.27 42 179 90 2.81 253 Czech Republic 2 126 3.26 6 927 74 2.75 203 Hungary 9 423 3.32 31 285 - - - Poland 1 063 3.06 3 249 2 0.75 1 Romania 55 2.57 142 - - - Slovakia 192 2.46 471 5 1.60 8 North America 827 1.05 871 413 2.31 954 Canada 11 5.23 57 11 4.09 45 United States of America 816 1.00 814 402 2.26 909 South America 5 518 4.70 25 937 12 3.88 45 Argentina 5 159 4.13 21 286 0 0 0 Western Europe 15 881 3.94 62 627 42 565 3.20 136 291 European Comm. (15) 15 868 3.94 62 571 39 042 2.98 116 538

Austria 177 3.81 675 179 3.86 690 BelgiumLuxembourg 2 066 3.46 7 147 3 113 3.61 11 246 France 5 217 4.84 25 269 8 516 2.70 22 981 Germany 296 3.29 974 8 178 3.53 28 872 Greece 1 3.67 4 650 4.25 2 763 Italy 1 052 4.57 4807 8 765 2.90 25 408 Netherlands 4 086 3.66 14 967 6 335 2.73 17 318 Portugal 1 9.33 6 567 3.57 2 027 Spain 2 100 3.64 7 634 938 2.66 2 494 United Kingdom 395 1.79 707 845 2.48 2 095

Switzerland 13 4.49 57 3 519 5.60 19 718 Other 99 1.88 185 434 0.97 422 World 59 932 3.03 181 764 48 352 3.06 148 051

Source: FAO (1999).

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Table C3: World trade in rabbit skins: average 1993–97

Country Exports Imports Volume Unit

value Value Volume Unit

value Value

tonnes US$/kg US$'000 tonnes US$/kg US$'000 Africa 2 2.25 4 15 1.21 18 Asia 92 19.00 1 756 587 3.13 1 837 China 71 22.97 1 631 288 2.62 753 China, Hong Kong SAR 14 7.56 103 10 7.27 74 Korea, Republic of 4 3.64 16 222 3.45 764 Eastern Europe 964 2.57 2 476 1 197 1.98 2 367 Czech Republic 544 3.33 1 813 679 2.28 1550 Hungary 234 1.28 299 180 0.34 60 Poland 3 2.50 7 160 1.99 317 Romania 1 24.00 14 26 0.49 13 Slovakia 228 1.88 429 68 2.33 159 North America 31 36.84 1 157 602 2.73 1 641 Canada 11 1.45 16 81 0.92 75 United States of America 20 55.92 1 141 521 3.01 1567 South America 238 2.53 602 348 3.27 1 138 Western Europe 2 068 2.37 4 904 1 781 2.07 3 691 European Comm. (15) 2 068 2.37 4 904 1 781 2.07 3 686

Austria - - 3 - - 1 Belgium-Luxembourg 868 2.41 2 091 920 1.88 1 730 France 824 2.48 2 041 250 3.45 864 Germany 5 1.70 8 5 2.65 12 Greece - - 0 0 - 10 Italy 196 0.99 194 130 1.94 253 Netherlands 34 1.59 55 10 2.88 28 Portugal 31 2.28 71 178 2.35 419 Spain 103 3.44 355 225 0.84 189 United Kingdom 6 5.23 32 63 2.86 180

Other 28 3.00 84 112 4.43 496 World 3 423 3.21 10 982 4 642 2.41 11 189

Source: FAO (1999).

33

Table C4: Estimated supply and disposal of wild rabbit products in Australia

Item Unit 1988-89

1989-90

1990-91

1991-92

1992-93

1993-94

1994-95

Average

Production – quantity '000 pair 1181 1581 1829 1151 1372 1143 1295 1365 – value a $m 2.766 3.795 4.389 2.671 3.292 2.724 2.195 3.605 Domestic sales Meat for human consumption – quantity tonnes b 1657 2210 3010 1600 1913 1600 1318 1901 – value a $m 4.763 6.287 7.329 4.572 5.525 4.572 3.810 6.070 Meat for pet food – quantity tonnes 591 724 876 572 648 572 457 634 – value b $m 0.472 0.579 0.701 0.457 0.533 0.457 0.381 0.591 Pelts – quantity tonnes 147 197 228 143 170 142 114 163 – value a $m 0.941 1.093 1.273 0.876 0.972 0.869 0.640 1.102 Export sales Meat for human consumption – quantity tonnes b 123 248 773 1081 236 167 37 381 – value a $m 0.274 0.731 2.534 3.477 0.665 0.398 0.172 1.351 Pelts – quantity tonnes 5 8 4 15 4 17 7 – value a $m 0.007 0.040 0.037 0.068 0.049 0.037 0.037 0.044

a Values in constant 1995-96 dollars. b Dressed weight. (–) negligible. Sources: Australian Bureau of Statistics (1996); ABARE.

34

Table C5: Volume and value of Australian exports of rabbit meat, by destination a

Unit 1988 -89

1989-90

1990 -91

1991-92

1992-93

1993 -94

1994 -95

1995 -96

1998-99

Belgium–Luxembourg – volume tonnes 0.0 0.0 0.0 43.9 0.0 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 0.0 105.8 0.0 0.0 0.0 0.0 0.0 Fiji – volume tonnes 0.0 0.0 0.0 15.0 0.0 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 0.0 30.0 0.0 0.0 0.0 0.0 0.0 France – volume tonnes 0.0 0.0 15.0 110.4 12.3 1.3 0.0 0.0 0.0 – value $'000 0.0 0.0 50.3 368.8 25.0 3.1 0.0 0.0 0.0 French Antilles – volume tonnes 0.0 0.0 27.1 54.0 0.0 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 88.5 152.8 0.0 0.0 0.0 0.0 0.0 French Guiana – volume tonnes 0.0 0.0 0.0 15.2 0.0 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 0.0 54.0 0.0 0.0 0.0 0.0 0.0 French Polynesia – volume tonnes 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 0.0 0.0 1.1 0.0 0.0 0.0 0.0 Germany – volume tonnes 0.0 0.0 2.2 12.9 0.0 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 7.9 40.0 0.0 0.0 0.0 0.0 0.0 Hong Kong – volume tonnes 0.0 0.0 1.0 1.4 1.0 1.3 0.6 0.0 0.1 – value $'000 0.0 0.0 7.5 9.7 6.1 7.8 4.3 0.0 4.9 Italy – volume tonnes 0.0 0.0 0.0 0.0 10.5 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 0.0 0.0 35.7 0.0 0.0 0.0 0.0 Japan – volume tonnes 0.0 0.0 0.0 0.0 23.0 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 0.0 0.0 37.2 0.0 0.0 0.0 0.0 Korea Republic – volume tonnes 0.0 0.0 0.0 0.0 7.3 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 0.0 0.0 23.0 0.0 0.0 0.0 0.0 Malaysia – volume tonnes 0.0 3.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 – value $'000 0.0 4.5 0.0 0.0 1.4 0.0 0.0 0.0 0.0 Netherlands – volume tonnes 0.0 0.2 47.0 39.8 12.9 1.2 0.0 0.0 0.0 – value $'000 0.0 1.8 128.4 139.4 31.8 5.4 0.0 0.0 0.0 New Caledonia – volume tonnes 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 1.6 0.0 0.0 0.0 0.0 0.0 0.0 New Zealand – volume tonnes 17.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 – value $'000 14.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Norway – volume tonnes 0.0 27.4 11.0 0.0 0.0 0.0 0.0 0.0 0.0 – value $'000 0.0 125.0 49.2 0.0 0.0 0.0 0.0 0.0 0.0 Papua New Guinea – volume tonnes 0.0 3.8 16.0 0.0 0.0 0.0 0.0 0.3 0.0 – value $'000 0.0 10.4 38.0 0.0 0.0 0.0 0.0 1.1 0.0 Portugal – volume tonnes 0.0 103.6 384.5 76.5 133.8 43.0 0.0 0.0 0.0

35

– value $'000 0.0 294.8 1290.0 215.4 420.5 75.5 0.0 0.0 0.0 Reunion – volume tonnes 0.0 0.0 76.0 327.7 0.0 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 245.0 1310.0 0.0 0.0 0.0 0.0 0.0 Seychelles – volume tonnes 0.0 0.0 0.0 19.0 0.0 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 0.0 42.0 0.0 0.0 0.0 0.0 0.0 Ship/Aircraft stores – volume tonnes 0.0 0.0 62.8 31.5 0.0 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 166.0 90.7 0.0 0.0 0.0 0.0 0.0 Singapore – volume tonnes 1.1 0.0 0.2 0.6 2.0 49.3 0.8 1.0 0.0 – value $'000 1.7 0.0 0.6 2.4 6.7 91.4 2.9 3.7 0.0 South Africa – volume tonnes 0.0 0.0 0.0 3.0 16.3 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 0.0 9.1 16.0 0.0 0.0 0.0 0.0 Spain – volume tonnes 0.0 0.0 30.0 31.5 15.4 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 104.0 108.1 61.1 0.0 0.0 0.0 0.0 Sweden – volume tonnes 0.0 1.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 – value $'000 0.0 7.6 7.4 0.0 0.0 0.0 0.0 0.0 0.0 Switzerland – volume tonnes 0.0 0.0 23.5 0.0 0.0 0.0 19.9 0.0 0.0 – value $'000 0.0 0.0 140.5 0.0 0.0 0.0 123.0 0.0 0.0 Taiwan – volume tonnes 0.0 0.0 0.0 0.0 0.0 7.1 6.0 0.0 0.0 – value $'000 0.0 0.0 0.0 0.0 0.0 20.0 16.4 0.0 0.0 Thailand – volume tonnes 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 – value $'000 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 0.0 United Kingdom – volume tonnes 0.0 0.0 72.0 152.7 0.0 0.0 5.0 2.7 0.0 – value $'000 0.0 0.0 202.9 377.4 0.0 0.0 9.6 3.0 0.0 United States – volume tonnes 104.3 109.1 3.0 124.3 0.0 64.0 4.3 0.0 0.0 – value $'000 257.7 286.8 6.0 329.6 0.0 194.4 16.2 0.0 0.0 United States Miscellaneous – volume tonnes 0.0 0.0 0.0 22.0 0.0 0.0 0.0 0.0 0.0 – value $'000 0.0 0.0 0.0 91.9 0.0 0.0 0.0 0.0 0.0 United States of America – volume tonnes 0.0 0.0 0.0 0.0 0.0 0.0 0.0 17.0 0.0 – value $'000 0.0 0.0 0.0 0.0 0.0 0.0 0.0 52.4 0.0 Total – volume tonnes 123.1 248.1 772.7 1081.2 235.7 167.0 36.6 21.2 0.1 – value $'000 274.2 731.0 2533.7 3477.0 665.4 397.5 172.5 60.9 4.9 – unit value

$/kg 2.2 2.9 3.3 3.2 2.8 2.4 4.7 2.9 44.8

a Meat and edible meat offal of rabbits or hares, fresh, chilled or frozen. Source: Australian Bureau of Statistics (1999).

36

Table C6: Volume and value of Australian imports of rabbit and hare pelts, by destination

Unit 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 Raw a Belgium-Luxembourg – volume '000 0 0 0 – 0 0 – value $'000 0 0 0 14.1 0 0 France – volume '000 0 – 0.3 428.7 170.0 241.0 – value $'000 0 72.8 247.8 335.5 78.5 151.2 Hungary – volume '000 0 0 31.1 0.0 15.0 0 – value $'000 0 0 123.3 0.0 48.7 0 New Zealand – volume '000 0 – 4.7 40.7 0 0 – value $'000 0 1.6 31.8 84.0 0 0 Portugal – volume '000 3.0 – 0 0 0 0 – value $'000 101.2 0.6 0 0 0 0 South Africa – volume '000 0 0.0 0 – 0 0 – value $'000 0 0.0 0 0.2 0 0 United Kingdom – volume '000 455.0 45.2 0 0 0 0 – value $'000 501.6 979.5 0 0 0 0 USA – volume '000 0 0.0 0 0 – 0 – value $'000 0 0.0 0 0 – 0 Total, raw – volume '000 458.0 45.2 36.1 469.6 185.0 241.0 – value $'000 602.8 1054.5 402.9 433.8 127.3 151.2 – unit value $/skin 1.32 23.30 11.16 0.92 0.69 0.63 Tanned or dressed b Italy – volume '000 0 0 0 – 0 0 – value $'000 0 0 0 1.1 0 0 United States – volume '000 – 0.1 0.1 – 0.3 0.1 – value $'000 – 0.5 0.7 0.5 1.9 1.4 Total, tanned or dressed – volume '000 – 0.1 0.1 – 0.3 0.1 – value $'000 – 0.5 0.7 1.5 1.9 1.4 – unit value $/skin 2.70 5.85 5.29 40.26 5.51 13.68

a Raw furskins of rabbit or hare, whole. b Tanned or dressed furskins, of rabbit or hare, whole. (–) negligible. Source: Australian Bureau of Statistics (1999).

37

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