A new report by ANZ on the Australian cattle industry has highlighted a critical choice facing the beef sector in the coming years between rebuilding herds to meet growing global demand or continuing to sell to capitalise on historically strong beef prices.
The agricultural report ‘Cattle Call’ was launched last week during an ANZ beef industry delegation to China and outlined a $7 billion growth opportunity by 2025 if the nation’s herd size can be increased significantly.
ANZ’s head of agribusiness Mark Bennett said Australia finds itself at a critical crossroad that requires the beef industry to consider current opportunity costs.
“There is the risk of jeopardising long-term earning capacity unless as an industry we can adapt to surging global demand for beef,” he said.
“It’s a balancing act between beef producers looking to capitalise on today’s market with the current high price cycle and understanding that as an industry we could look for longer-term prosperity by rebuilding a larger national herd.”
ANZ regional executive for Southern WA Sarah Lang said a number of exciting projects are happening locally to bring beef profits to the region.
“Increases in herd numbers across Western Australia have delivered ample supply to the South West with the region hosting some of the sector’s major exporters and two of Australia’s largest meat processors,” she said.
“V&V Walsh in Bunbury, for example, recently opened an abattoir in China to improve supply chain efficiencies into that market.
“On a similar note, beef producers in the region are looking to diversify their market reach, including those entering into arrangements with Margaret River wineries to supply quality produce that complements the region’s premium wine offering.”
The report found keeping herd slaughter rates high in the short term will provide immediate returns but lower slaughter rates and herd building could be the difference between a $16.4 billion and $9 billion industry.
Australia exported 84 per cent of its total beef and veal production in 2014-15 with the US now Australia’s largest and most valuable export market, worth over $3 billion in 2015. Exports to China have also grown rapidly since 2011 and are currently worth around $1 billion a year.
Mr Bennett said the future of the industry is bright with opportunities to continue supply to a strong overseas market.
