BEEF INDUSTRY

The Australian beef industry is a major contributor to the Australian economy with cattle and calf production having a gross value of approximately $8 billion per annum, of which Queensland generates approximately 50%.

In 2008-09, Australian cattle graziers produced 2.1 mt of beef and veal. Under normal market conditions, approximately 60% of production is exported, mainly to US, Japan and Korea. Australia only produces approximately 4% of the world’s beef supply, but is second largest exporter of meat in the world behind Brazil.

Summary of facts and statistics about the Australian beef industry for the 2008-09 fiscal year:

• There are 61,925 establishments with cattle (ABS)
• Australia exported a total of 968 kt of beef and veal and exported 856,000 head of live cattle
• In 2008-09, Australia exported 67% of its total beef and veal production to over 100 countries (DAFF/ABS)
• The top five markets for Australian beef and veal are: Japan, US, Korea, Indonesia and Taiwan
• The total value of the Australian beef chilled export market has increased from A $1.62 billion in 2002-03 to A$2.02 billion in 2007-08, a 25% increase (ABS)
• Total value of beef exports has increased 22% from A$3.9 billion in 2002-03 to A$5 billion in 2008-09 (ABS)
• The beef industry (including live cattle) contributes 17% to total Australian farm exports, ranking it the most valuable farm export in 2008-09 (MLA)
• Since 2002-03 Australian consumers have increased their expenditure on beef by 25% from an estimated A$5.4 billion to A$6.7 billion in 2007-08 (MLA preliminary estimates)

The Australian weighted average saleyard price for beef is forecast to be around 279 c/kg in 2009-10 and 272 c/kg in 2010-11, compared with 296 c/kg in 2008-09.

The forecast lower domestic beef prices in the short term mainly reflect the effect of increased competition for Australian beef in key export markets, especially in Japan and the Republic of Korea. In addition, the assumed higher average value of the Australian dollar over these two years, especially against the US dollar, is expected to place downward pressure on beef export earnings and, hence, domestic saleyard prices.

However, herd rebuilding in many regions has the potential to lead to a higher average saleyard price than currently forecast, particularly if favourable seasonal conditions eventuate.

Stronger economic recovery in Australia’s major export markets, namely Japan, the Republic of Korea, Chinese Taipei and Indonesia, could lead to stronger demand than currently forecast. This would especially be the case if US beef shipments were insufficient to meet the increased demand. This situation could arise given the contraction of the US beef cattle herd and the expectation of lower beef production over the next few years as breeding stock is retained for herd rebuilding.

In 2008-09, the Australian cattle herd fell by more than 1% to 27 million head, with significant declines in Queensland, Northern Territory and Victoria. Less than favourable seasonal conditions in many regions prevented an increase in cattle numbers. Slaughter of cows and heifers was up by 3% in 2008-09 and was the highest slaughter for some years.

However, in the first half of 2009-10, total slaughter declined year on year by 6%, reflecting improved seasonal conditions in many regions in eastern Australia.

In late 2009 and early 2010, significant rainfall across much of northern Australia has led to reduced turn-off as transport became difficult in some areas and graziers withheld cattle in anticipation of improved pasture growth. For Australia as a whole, the cattle herd is forecast to be around 27.1 million head by June 2010.

Over the medium term, the Australian cattle herd is projected to increase gradually under the assumption of favourable seasonal conditions. Also supporting the increase will be stronger export demand as a result of income growth, and hence increased beef consumption, in Australia’s major export markets. The Australian cattle herd is projected to grow by almost 3%, reaching around 28 million head by the end of 2014-15. (ABARE, Australian Commodities, March 2010)