RELIEF from drought coupled with high prices and solid farm income growth have added up to a great year for livestock producers and a real chance to rebuild the herd and flock.
Bank it.
But be aware it’s not all plain sailing ahead and continual improvements to productivity will be crucial to remaining price competitive.
That was the message from one of Australia’s most senior agricultural economists, Trish Gleeson, at the Australian Bureau of Agriculture Resource Economics and Sciences (ABARES) annual Outlook conference in Canberra this week.
As global beef demand increases, there will be opportunities for exporters but there were a number of things that needed to be prioritised in order to take advantage of that, according to Ms Gleeson, acting ABARES chief commodity analyst.
All parts of the supply chain needed to continue to invest in productivity improvements, efforts to negotiate trade agreements and maintain trade relationships that support access for Australian product had to be at the top of the list and Australia needs to maintain its status as a sustainable, disease-free livestock and meat producer.
That would be the foundation for distinguishing ourselves on quality, she said.
ABARES believes sheep and cattle producers will see farm cash income results this financial year that among the best recorded.
In 2104-15, with the highest beef cattle turn-off in 36 years, average farm cash incomes lifted by 70 per cent and they increased by a further 70pc the next financial year even though slaughter was coming down.
This year, they are still going up and are forecast to finish at an average $163,000 a farm.
“Beef farm cash incomes in southern Australia over the past two years have been the highest recorded in the past 40 years,” Ms Gleeson said.
“The north has fallen short of reaching records with the extended dry conditions in Queensland a factor.”
Going forward the picture is still bright but there are obstacles to navigate.
“We’re looking at hot weather in many regions over the next few months,” Ms Gleeson said.
“The difficulties processors are facing sourcing cattle is driving prices above what our international customers want to pay.
“We will need a productivity boost in the face of prices easing in medium term.”
ABARES has been clear that Australian beef is facing increased competition is most of our export markets.
“The increased US focus on exports will affect demand in high-value markets for Australia, such as China, Japan and Korea,” Ms Gleeson said.
“We also have the prospect of South American gaining increased access to our markets.”
The Importance of Market Access
Research presented at ABARES showed improved market access accounted for a massive 88 per cent of Australia’s $2.8 billion beef export growth between 2000 and 2014.
“We gained where other countries suffered embargoes and bans,” Ms Gleeson said.
Likewise, it explained 55pc of Brazil’s growth in the same period.
For Australia, lower export supply costs, from on-farm through to arrival at port, drove 26pc of export growth while rising global incomes leading to higher importer demand explained 8pc of growth.