Victoria's Beef Cattle Industry
Victoria’s Beef Cattle Industry Summer 2010
Key points
Figure 1: Victoria’s beef production regions
• This Beef Cattle Industry Profile provides an overview of the location, structure and financial performance of Victoria’s beef cattle industry. • The beef industry is Victoria’s third largest Location of beef growing areas agricultural industry, with a gross value of agricultural production of around $1.23 billion. Shepparton Corryong Rochester Benalla • Beef cattle numbers in Victoria have fallen from 2.78 million in the early 1980s to 2.18 million in 2009. Ballarat • Domestic consumption of beef has remained relatively steady at around 32Bairnsdale Hamilton Melbourne 40 kg per person per year since the mid Warragul Geelong 1980s.1 Warrnambool • The beef cattle industry is Victoria’s most geographically extensive industry. There are around 12,900 beef producers in Victoria. Location of Victoria’s beef cattle farms • In 2009 Victorian fresh, chilled and frozen Beef production occurs across all regions in Victoria, but is concentrated in the Western beef and veal exports were valued at District (25 per cent of the herd), Gippsland (27 per cent), the Ovens‑Murray District $734 million – 14 per cent of the Australian (14 per cent) and the Goulburn District (10 per cent). total of $5 billion.
Structure of Victoria’s beef cattle industry
of meat produced in Victoria is largely affected by seasonal conditions, domestic and foreign demand and the prices of inputs into the production cycle. These factors influence farmer’s decisions on beef cattle stocking rates relative to sheep and lamb stocking rates and saleyard throughput – thus influencing the numbers of adult cattle and calves slaughtered and the amounts of beef and veal produced.
As of 2007‑08 there were 8,719 specialised beef cattle farms in Victoria and 1,651 mixed beef/sheep farms. Together with 2,511 beef/cropping or sheep/cropping farms, they carry a total beef cattle herd of 2.18 million, which has fluctuated between 2 and 3 million over the past 30 years (Figure 2).
Since declining to 1.9 million in 2006, the Victorian cattle slaughter rate has recovered, as Victorian producers cut back on herd sizes as they deal with poor seasonal conditions and the appreciation of the Australian dollar. Since the 2006 drought Victoria’s livestock slaughterings have been around 2.1 to 2.2 million head per annum.
The number of Victorian farms has decreased over time from around 70,000 in 1969‑70 to 34,000 in 2007‑08.2 However, in the same period average farm size and herd size have increased. Average Victorian beef farms have increased from less than 300 hectares in the 1960s to around 750 hectares in recent years. Around 15 per cent of herds in Victoria exceed 150 head.
Average animal slaughter weights have increased over time, rising by 13 per cent since 1995. The average carcass weight of a slaughtered animal in Victoria in 2009 was 246 kg.
While most of Victoria’s beef cattle are kept on managed pastures, around 13 per cent (or 283,000 head) are grown out in feedlots. There are around 25 feedlots accredited under the National Feedlot Accreditation Scheme – which allows operators to export beef produced – and around 250 small unaccredited feedlots in Victoria.3 The capacity of Victoria’s feedlots is around 84,000 head.4 Victorian feedlots are predominantly geared to produce beef for the domestic market, with shorter feeding regimes and higher turnover rates compared to feedlots in Queensland and New South Wales.
Domestic demand and exports of Victoria’s beef products The domestic market for beef is driven by consumer preferences, competition with other protein sources (e.g. poultry meat) and price. Despite competition from cheaper meats, beef consumption has remained relatively steady since the mid 1980s, with per capita consumption remaining around 35‑40 kg per year.
In September 2009, 54,000 cattle were in feedlots, compared to only 27,900 in September 2008. This increase was due mainly to lower feed grain prices in 2009.
While domestic consumption has remained steady, higher herd and slaughter rates have increased the importance of exports.
Meat processors and abattoirs are located across much of Victoria. There are around 30 abattoirs in Victoria. Four are located in metropolitan Melbourne, while the rest are spread across rural and regional centres like Geelong, Warrnambool, Mildura, Wodonga and Colac.
In 1988‑89 around 53 per cent of Victorian beef production was exported. This increased to 64 per cent in 2007‑08 reflecting improvements in market access arrangements in Asia and drought conditions in Australia which lead to an increase in slaughterings.
Victoria’s beef and veal production
The value of fresh, chilled or frozen beef and veal exports from Victoria in 2009 was $734 million, compared to the Australian total of $5 billion.
The beef cattle industry in Victoria generally supplies smaller, younger animals chiefly for the domestic market and higher quality stock for the Japanese market. The volume and value
Victoria’s major markets for beef are Japan, the Republic of Korea and the United States.
Figure 2: Beef Cattle Numbers (Victoria) Cattle Numbers
Victoria 5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0 2009
2006
2003
2000
1997
1994
1991
1988
1985
1982
1979
1976
Years (ending 31 June)
1973
1970
1967
1964
2
Source: ABS, Historical Agriculture Commodities 1861‑2009, (cat. no. 7124.0)
Victoria’s Beef Cattle Industry Summer 2010
Prices Seasonal conditions, fluctuations in slaughter rates, export demand and exchange rates are major determinants of the saleyard cattle prices in Victoria.
Victoria’s smaller beef cattle producers are likely to require larger productivity growth to sustain profits and export competitiveness in a market faced with increasing international competition, economic volatility, declining terms of trade and climate change. Nevertheless, Victorian beef cattle producers appear well equipped to improve productivity growth.8
Over the past decade, the export price for chilled boneless beef has closely tracked the Eastern Young Cattle Indicator (EYCI) and the Saleyard Cattle price for Japanese grass‑ finished steers (Jap Ox cwt) (Figure 4).5 Beef cattle saleyard prices are being driven largely by demand for premium table beef in North Asia and the value of the Australian dollar.6
Employment on Victoria’s beef cattle farms
Total factor productivity Growth in total factor productivity of Victorian beef farmers has been driven by improved breed genetics, pastures, farming systems and scale economies. Total factor productivity growth in the Victorian beef cattle industry between 1977‑ 78 and 2006‑07 averaged 1 per cent per year. The national average for the beef cattle industry over the same period was 1.5 per cent.7
In 2006, the number of Victorians employed on beef cattle, sheep/beef cattle, sheep/cropping and beef/cropping farms was approximately 11,590. Of those, 8,342 were employed in the beef cattle industry.9 The Victorian meat processing industry employs around 9,200 people, of which 4,700 are employed in abattoirs and meat packing facilities, with 1,400 working in metropolitan Melbourne.
Figure 3: Victorian beef and veal exports 800,000
150,000
600,000
$ million
Total value ($m)
700,000
500,000 100,000
400,000 300,000
50,000
200,000 100,000
0
0 1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
Year
2004/05
2005/06
2006/07
2007/08
2008/09
Source: ABS International Merchandise Export Statistics (Unpublished).
Figure 4: Saleyard prices and export prices EYCI Cents per Kg
Quantity Tonnes
Qty tonnes 200,000
Avg. Aust chilled boneless beef to Japan
Victorian - Saleyard Cattle price for Jap Ox cwt
2004
2007
700 600 500 400 300 200 100 0 2003 Year
2005
2006
2008
2009
2010
Source: MLA Statistical Review 2009 & MLA – Market Statistics Database, 2009
3
Financial performance of the Victorian beef cattle industry
Figure 5: Beef industry supply chain
The data set below illustrates the average costs and receipts for Victorian broad acre farmers for the years 2007‑08 to 2008‑09. Financial performance data relating solely to beef cattle farms is not available as it is embedded in the broadacre farm information which includes sheep, wool, lambs and cropping activities.
Producers - feedlots and farmers
Saleyards, agents and major supermarket chains
Overall, farm financial performance for the broadacre industry declined from 2007‑08 to 2008‑09. Continued poor seasonal conditions have resulted in average farm cash incomes for broadacre farmers declining from $71,600 in 2007‑08 to $50,000 in 2008‑09. Prices for grains, wool and beef cattle were lower than the previous year.
Abattoirs
Hides
Freezing facilities - offal
Rendering plants - fat and bone
Historically, average farm cash income for Victorian broad acre farmers is lower than the national average. This reflects Victoria’s smaller average farm size.
Boning carcasses
Government policy/regulation influences A current issue for the national and Victorian beef industry is retail meat labelling. In response to industry concerns about the accuracy of meat labelling, a 2009 Senate report on Meat Marketing and the NSW Food Amendment (Meat Labelling) Bill 2009, mechanisms to improve meat labelling are under active consideration by state, territory and Australian governments.
Manufacturing
Retailing
Wholesaling
Domestic market
Export
Table 1: Estimates of broad acre - farm financial performance 2007-08 to 2008-0910 Average Costs and Receipts and Financial Performance per farm Gippsland
Receipts Costs Financial performance
Farm equity
South West Victoria
Victoria
2007-08
2008-09
2007-08
2008-09
2007-08
2008-09
Total cash receipts Total Cash Costs
$
168,600*
143,000
332,300
319,000
312,100
279,000
$
134,600
139,000
247,300
232,000
240,500
228,000
Farm Cash Income Farms with negative farm cash income11 Farm Business profit Farms with negative farm business profit11 Equity ratio at 30 June
$
33,900
4,000
84,900
86,000
71,600
50,000
%
32*
44
40
35
30
39
$
-26,000**
-55,000
13,500**
7,000
-3,700**
-29,000
%
73
92
71
71
66
79
%
95
na
90
na
90
na
Source: ABARE Farm Financial Performance – Australian Agriculture and Grazing Industries Survey
4
Notes: 1 MLA Statistical Review 2009. 2 ABS Year Book of Australia (numerous), (cat. no. 1301.0). 3 Australian Lot Feeders Association, Victorian Feed Lot Committee. 4 Australian Lot Feeders Association, ALFA/MLA Feedlot Survey & ALFA Media Release 20 Oct 2009. 5 MLA Statistical Review 2009 & MLA – Market Statistics Database, 2009. 6 Roberts, I, Haseltine, I & Maliyasena, A 2009, Factors Affecting Australia’s Agricultural Exports, ABARE Issues Paper 09.5, Canberra. 7 ABARE, Unpublished Total Factor Productivity data for the years 1977‑78 to 2006‑07.
8
Nossal, k, Sheng, Y and Zhao, S 2008, Productivity in the beef cattle and slaughter lamb industries, ABARE Research Report 08.13, Canberra. 9 ABS Census Data, (cat. no. 2604.0 – CDATA Online). 10 Figures in the above table are based on ABARE estimates. Estimates with an Relative Standard Error (RSE) between 25% and 50% are annotated with the symbol ‘*’, indicating that the estimate should be used with caution as it is subject to sampling variability too high for most practical purposes. Estimates with an RSE greater than 50% are annotated with the symbol ‘**’ indicating that the sampling variability causes the estimates to be considered too unreliable for general use.
11 Farms with negative cash income are illiquid – that is they can’t earn enough to pay off all current liabilities such as worker claims, interest expenses, material purchases, etc. Farm cash income is a short‑term measure of farm income because it takes no account of depreciation on assets. Farm business profit is a long‑term measure of the profitability of farms because it takes account of depreciation and inventory changes. Farms with negative business profit are not earning enough to cover all costs including capital costs and rewards to family workers. Negative profitability could be short or long term.
If you would like to receive this publication in an accessible format (such as large print or audio) please call the Customer Service Centre on: 136 186.
This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968.
Disclaimer
Published by the Department of Primary Industries, Agriculture and Forest Industries Policy Branch. January 2010
Authorised by the Victorian Government, 1 Spring Street, Melbourne, Victoria 3000, Australia ISBN 978-1-74217-948-3 (print) ISBN 978-1-74217-949-0 (online)
© The State of Victoria, 2010
This publication may be of assistance to you but the State of Victoria and its employees do not guarantee that the publication is without flaw of any kind or is wholly appropriate for your particular purposes and therefore disclaims all liability for any error, loss or other consequence which may arise from you relying on any information in this publication. For more information about DPI visit www.dpi.vic.gov.au or call the Customer Service Centre on 136 186
Key points
Figure 1: Victoria’s beef production regions
• This Beef Cattle Industry Profile provides an overview of the location, structure and financial performance of Victoria’s beef cattle industry. • The beef industry is Victoria’s third largest Location of beef growing areas agricultural industry, with a gross value of agricultural production of around $1.23 billion. Shepparton Corryong Rochester Benalla • Beef cattle numbers in Victoria have fallen from 2.78 million in the early 1980s to 2.18 million in 2009. Ballarat • Domestic consumption of beef has remained relatively steady at around 32Bairnsdale Hamilton Melbourne 40 kg per person per year since the mid Warragul Geelong 1980s.1 Warrnambool • The beef cattle industry is Victoria’s most geographically extensive industry. There are around 12,900 beef producers in Victoria. Location of Victoria’s beef cattle farms • In 2009 Victorian fresh, chilled and frozen Beef production occurs across all regions in Victoria, but is concentrated in the Western beef and veal exports were valued at District (25 per cent of the herd), Gippsland (27 per cent), the Ovens‑Murray District $734 million – 14 per cent of the Australian (14 per cent) and the Goulburn District (10 per cent). total of $5 billion.
Structure of Victoria’s beef cattle industry
of meat produced in Victoria is largely affected by seasonal conditions, domestic and foreign demand and the prices of inputs into the production cycle. These factors influence farmer’s decisions on beef cattle stocking rates relative to sheep and lamb stocking rates and saleyard throughput – thus influencing the numbers of adult cattle and calves slaughtered and the amounts of beef and veal produced.
As of 2007‑08 there were 8,719 specialised beef cattle farms in Victoria and 1,651 mixed beef/sheep farms. Together with 2,511 beef/cropping or sheep/cropping farms, they carry a total beef cattle herd of 2.18 million, which has fluctuated between 2 and 3 million over the past 30 years (Figure 2).
Since declining to 1.9 million in 2006, the Victorian cattle slaughter rate has recovered, as Victorian producers cut back on herd sizes as they deal with poor seasonal conditions and the appreciation of the Australian dollar. Since the 2006 drought Victoria’s livestock slaughterings have been around 2.1 to 2.2 million head per annum.
The number of Victorian farms has decreased over time from around 70,000 in 1969‑70 to 34,000 in 2007‑08.2 However, in the same period average farm size and herd size have increased. Average Victorian beef farms have increased from less than 300 hectares in the 1960s to around 750 hectares in recent years. Around 15 per cent of herds in Victoria exceed 150 head.
Average animal slaughter weights have increased over time, rising by 13 per cent since 1995. The average carcass weight of a slaughtered animal in Victoria in 2009 was 246 kg.
While most of Victoria’s beef cattle are kept on managed pastures, around 13 per cent (or 283,000 head) are grown out in feedlots. There are around 25 feedlots accredited under the National Feedlot Accreditation Scheme – which allows operators to export beef produced – and around 250 small unaccredited feedlots in Victoria.3 The capacity of Victoria’s feedlots is around 84,000 head.4 Victorian feedlots are predominantly geared to produce beef for the domestic market, with shorter feeding regimes and higher turnover rates compared to feedlots in Queensland and New South Wales.
Domestic demand and exports of Victoria’s beef products The domestic market for beef is driven by consumer preferences, competition with other protein sources (e.g. poultry meat) and price. Despite competition from cheaper meats, beef consumption has remained relatively steady since the mid 1980s, with per capita consumption remaining around 35‑40 kg per year.
In September 2009, 54,000 cattle were in feedlots, compared to only 27,900 in September 2008. This increase was due mainly to lower feed grain prices in 2009.
While domestic consumption has remained steady, higher herd and slaughter rates have increased the importance of exports.
Meat processors and abattoirs are located across much of Victoria. There are around 30 abattoirs in Victoria. Four are located in metropolitan Melbourne, while the rest are spread across rural and regional centres like Geelong, Warrnambool, Mildura, Wodonga and Colac.
In 1988‑89 around 53 per cent of Victorian beef production was exported. This increased to 64 per cent in 2007‑08 reflecting improvements in market access arrangements in Asia and drought conditions in Australia which lead to an increase in slaughterings.
Victoria’s beef and veal production
The value of fresh, chilled or frozen beef and veal exports from Victoria in 2009 was $734 million, compared to the Australian total of $5 billion.
The beef cattle industry in Victoria generally supplies smaller, younger animals chiefly for the domestic market and higher quality stock for the Japanese market. The volume and value
Victoria’s major markets for beef are Japan, the Republic of Korea and the United States.
Figure 2: Beef Cattle Numbers (Victoria) Cattle Numbers
Victoria 5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0 2009
2006
2003
2000
1997
1994
1991
1988
1985
1982
1979
1976
Years (ending 31 June)
1973
1970
1967
1964
2
Source: ABS, Historical Agriculture Commodities 1861‑2009, (cat. no. 7124.0)
Victoria’s Beef Cattle Industry Summer 2010
Prices Seasonal conditions, fluctuations in slaughter rates, export demand and exchange rates are major determinants of the saleyard cattle prices in Victoria.
Victoria’s smaller beef cattle producers are likely to require larger productivity growth to sustain profits and export competitiveness in a market faced with increasing international competition, economic volatility, declining terms of trade and climate change. Nevertheless, Victorian beef cattle producers appear well equipped to improve productivity growth.8
Over the past decade, the export price for chilled boneless beef has closely tracked the Eastern Young Cattle Indicator (EYCI) and the Saleyard Cattle price for Japanese grass‑ finished steers (Jap Ox cwt) (Figure 4).5 Beef cattle saleyard prices are being driven largely by demand for premium table beef in North Asia and the value of the Australian dollar.6
Employment on Victoria’s beef cattle farms
Total factor productivity Growth in total factor productivity of Victorian beef farmers has been driven by improved breed genetics, pastures, farming systems and scale economies. Total factor productivity growth in the Victorian beef cattle industry between 1977‑ 78 and 2006‑07 averaged 1 per cent per year. The national average for the beef cattle industry over the same period was 1.5 per cent.7
In 2006, the number of Victorians employed on beef cattle, sheep/beef cattle, sheep/cropping and beef/cropping farms was approximately 11,590. Of those, 8,342 were employed in the beef cattle industry.9 The Victorian meat processing industry employs around 9,200 people, of which 4,700 are employed in abattoirs and meat packing facilities, with 1,400 working in metropolitan Melbourne.
Figure 3: Victorian beef and veal exports 800,000
150,000
600,000
$ million
Total value ($m)
700,000
500,000 100,000
400,000 300,000
50,000
200,000 100,000
0
0 1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
Year
2004/05
2005/06
2006/07
2007/08
2008/09
Source: ABS International Merchandise Export Statistics (Unpublished).
Figure 4: Saleyard prices and export prices EYCI Cents per Kg
Quantity Tonnes
Qty tonnes 200,000
Avg. Aust chilled boneless beef to Japan
Victorian - Saleyard Cattle price for Jap Ox cwt
2004
2007
700 600 500 400 300 200 100 0 2003 Year
2005
2006
2008
2009
2010
Source: MLA Statistical Review 2009 & MLA – Market Statistics Database, 2009
3
Financial performance of the Victorian beef cattle industry
Figure 5: Beef industry supply chain
The data set below illustrates the average costs and receipts for Victorian broad acre farmers for the years 2007‑08 to 2008‑09. Financial performance data relating solely to beef cattle farms is not available as it is embedded in the broadacre farm information which includes sheep, wool, lambs and cropping activities.
Producers - feedlots and farmers
Saleyards, agents and major supermarket chains
Overall, farm financial performance for the broadacre industry declined from 2007‑08 to 2008‑09. Continued poor seasonal conditions have resulted in average farm cash incomes for broadacre farmers declining from $71,600 in 2007‑08 to $50,000 in 2008‑09. Prices for grains, wool and beef cattle were lower than the previous year.
Abattoirs
Hides
Freezing facilities - offal
Rendering plants - fat and bone
Historically, average farm cash income for Victorian broad acre farmers is lower than the national average. This reflects Victoria’s smaller average farm size.
Boning carcasses
Government policy/regulation influences A current issue for the national and Victorian beef industry is retail meat labelling. In response to industry concerns about the accuracy of meat labelling, a 2009 Senate report on Meat Marketing and the NSW Food Amendment (Meat Labelling) Bill 2009, mechanisms to improve meat labelling are under active consideration by state, territory and Australian governments.
Manufacturing
Retailing
Wholesaling
Domestic market
Export
Table 1: Estimates of broad acre - farm financial performance 2007-08 to 2008-0910 Average Costs and Receipts and Financial Performance per farm Gippsland
Receipts Costs Financial performance
Farm equity
South West Victoria
Victoria
2007-08
2008-09
2007-08
2008-09
2007-08
2008-09
Total cash receipts Total Cash Costs
$
168,600*
143,000
332,300
319,000
312,100
279,000
$
134,600
139,000
247,300
232,000
240,500
228,000
Farm Cash Income Farms with negative farm cash income11 Farm Business profit Farms with negative farm business profit11 Equity ratio at 30 June
$
33,900
4,000
84,900
86,000
71,600
50,000
%
32*
44
40
35
30
39
$
-26,000**
-55,000
13,500**
7,000
-3,700**
-29,000
%
73
92
71
71
66
79
%
95
na
90
na
90
na
Source: ABARE Farm Financial Performance – Australian Agriculture and Grazing Industries Survey
4
Notes: 1 MLA Statistical Review 2009. 2 ABS Year Book of Australia (numerous), (cat. no. 1301.0). 3 Australian Lot Feeders Association, Victorian Feed Lot Committee. 4 Australian Lot Feeders Association, ALFA/MLA Feedlot Survey & ALFA Media Release 20 Oct 2009. 5 MLA Statistical Review 2009 & MLA – Market Statistics Database, 2009. 6 Roberts, I, Haseltine, I & Maliyasena, A 2009, Factors Affecting Australia’s Agricultural Exports, ABARE Issues Paper 09.5, Canberra. 7 ABARE, Unpublished Total Factor Productivity data for the years 1977‑78 to 2006‑07.
8
Nossal, k, Sheng, Y and Zhao, S 2008, Productivity in the beef cattle and slaughter lamb industries, ABARE Research Report 08.13, Canberra. 9 ABS Census Data, (cat. no. 2604.0 – CDATA Online). 10 Figures in the above table are based on ABARE estimates. Estimates with an Relative Standard Error (RSE) between 25% and 50% are annotated with the symbol ‘*’, indicating that the estimate should be used with caution as it is subject to sampling variability too high for most practical purposes. Estimates with an RSE greater than 50% are annotated with the symbol ‘**’ indicating that the sampling variability causes the estimates to be considered too unreliable for general use.
11 Farms with negative cash income are illiquid – that is they can’t earn enough to pay off all current liabilities such as worker claims, interest expenses, material purchases, etc. Farm cash income is a short‑term measure of farm income because it takes no account of depreciation on assets. Farm business profit is a long‑term measure of the profitability of farms because it takes account of depreciation and inventory changes. Farms with negative business profit are not earning enough to cover all costs including capital costs and rewards to family workers. Negative profitability could be short or long term.
If you would like to receive this publication in an accessible format (such as large print or audio) please call the Customer Service Centre on: 136 186.
This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968.
Disclaimer
Published by the Department of Primary Industries, Agriculture and Forest Industries Policy Branch. January 2010
Authorised by the Victorian Government, 1 Spring Street, Melbourne, Victoria 3000, Australia ISBN 978-1-74217-948-3 (print) ISBN 978-1-74217-949-0 (online)
© The State of Victoria, 2010
This publication may be of assistance to you but the State of Victoria and its employees do not guarantee that the publication is without flaw of any kind or is wholly appropriate for your particular purposes and therefore disclaims all liability for any error, loss or other consequence which may arise from you relying on any information in this publication. For more information about DPI visit www.dpi.vic.gov.au or call the Customer Service Centre on 136 186
