A learned young stock agent this week remind me of a very old saying: “farmers can handle fire, flood and famine but they can’t handle seeing grass uneaten in their paddocks.”
The saying rings true of a new dilemma now facing the Australian cattle industry with its now endless kilometres of uneaten grass as whether to re-build the nation’s herd to meet growing demand for global beef or continue selling to capitalize on historically strong beef prices.
The dilemma has been highlighted by new agri-business report called “Cattle Call”, a product of ANZ Bank which outlines a AU$7 billion growth opportunity by 2025 if the nation’s herd size can be increased significantly.
The “Cattle Call” report says: “Australia’s beef industry finds itself at a critical crossroad that requires a call for serious consideration of some opportunity cost”.
ANZ’s Head of Agribusiness, Mark Bennett, who is currently leading an ANZ delegation of beef industry producers, processors and industry advisors to China, said: “There is the risk of jeopardising long-term earning capacity unless as an industry we can adapt to surging global beef demand.
“It’s a balancing act for Australia’s beef producers as they look to capitalize 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”.
Cattle Call key findings:
- 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 A$16.4 billion and A$9b industry
- But if the beef industry continues on its current path it will be worth A$11.8b with only 21.6m head of cattle in 2025
- Australia’s beef cattle herd has declined from 26.5m in 2013 to 23.3m 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 A$3b in 2015
- Exports to China have increased rapidly since 2011 and are currently worth around A$1b per annum
- Australia is facing increased export competition to China, but Australian beef quality and safety gives it a significant advantage.
The report suggests a 10 year timeframe to lift Australia’s herd size, which sits at a 20 year low of 23.3m.
