Aussie beef at tip­ping point

ANZ re­port finds Aussie beef is at a tip­ping point

Farms & Farm Machinery - - Contents -

Ex­porters who con­tinue to ex­ploit high prices could cause a down­turn in the in­dus­try fur­ther down the track, a new re­port from ANZ has found.

The re­port, ti­tled Cat­tle Call, rec­om­mends beef pro­duc­ers be­gin re­build­ing herd numbers to meet grow­ing in­ter­na­tional de­mand for beef, as drought con­di­tions and cur­rent de­mand see herd numbers fall.

The cur­rent cat­tle herd size in Aus­tralia is at a two-decade low of 23.3 mil­lion, the re­port finds.

ANZ says a $7 bil­lion growth in the in­dus­try is pos­si­ble by 2025 if cat­tle numbers can be in­creased quickly.

ANZ’s head of agribusi­ness Mark Ben­nett says the long-term gain should be worth the short-term change.

“Aus­tralia’s beef in­dus­try finds it­self at a crit­i­cal cross­road that re­quires a call for se­ri­ous con­sid­er­a­tion of some op­por­tu­nity cost,” he says.

“It’s a bal­anc­ing act for Aus­tralia’s beef pro­duc­ers as they un­der­stand­ably look to cap­i­talise on today’s mar­ket with the cur­rent high-price cy­cle, while also un­der­stand­ing that as an in­dus­try we could look for longer-term pros­per­ity that comes from re­build­ing a larger na­tional herd that brings more valu­able out­put for the longer term.”

Key find­ings from Cat­tle Call in­clude:

• Keep­ing herd slaugh­ter rates high in the short-term will pro­vide im­me­di­ate re­turns to farm­ers, how­ever lower slaugh­ter rates and herd build­ing could be the dif­fer­ence be­tween a $16.4 bil­lion and $9 bil­lion in­dus­try

• If the beef in­dus­try con­tin­ues on its cur­rent path, it will be worth $11.8 bil­lion with only 21.6 mil­lion head of cat­tle in 2025

• Aus­tralia’s beef cat­tle herd has de­clined from 26.5 mil­lion in 2013 to 23.3 mil­lion in 2016 due to drought con­di­tions and high prices lead­ing to high cat­tle turn-off rates • Aus­tralia ex­ported 84 per cent of its to­tal beef and veal

pro­duc­tion in 2014-15

• Since 2011, Aus­tralian ex­ports to the United States have in­creased sig­nif­i­cantly, and the US is now Aus­tralia’s largest and most valu­able ex­port mar­ket – worth over $3 bil­lion in 2015

• Ex­ports to China have in­creased rapidly since 2011 and

are cur­rently worth around $1 bil­lion a year

• Aus­tralia is fac­ing in­creased ex­port com­pe­ti­tion to

China, but Aus­tralian beef qual­ity and safety gives it a sig­nif­i­cant ad­van­tage.

With 84 per cent of Aus­tralia’s to­tal beef pro­duc­tion be­ing ex­ported over the 2014-15 fi­nan­cial year, Ben­nett says be­ing able to meet fu­ture de­mand is cru­cial.

“If we are to con­tinue to sup­ply and grow strong over­seas mar­kets, the key will be to en­sure greater out­put and fo­cus on value – as well as adopt­ing an in­creased fo­cus on pro­duc­tion, pro­cess­ing, and trade pro­duc­tiv­ity.”

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