AS the consumer world segments and creates potential for higher value supply chains, will Australian beef grasp that opportunity and break through the current stalemate between producers and downstream operators that is holding it back?
That question has been posed by Jock Whittle, the man at the helm of one of the country’s most successful corporate farming ventures, Macquarie Bank’s Paraway Pastoral Company.
Paraway has just celebrated 10 years in cattle production and today produces about 25 million kilograms of beef from 4.4 million hectares with operating returns outperforming the average for the Australian pastoral industry.
Mr Whittle spoke at the Australian Lot Feeders Association annual conference, SmartBeef 2017, about the cultural attitude change he believes is needed to take the industry forward.
The opportunity for beef was to move into genuine supply chains and deliver products to the consumers with the most money in their pockets, he said.
“Who do we want to sell to - the guys who buy Mercedes or the ones still on a pushbike?” he asked a sold-out audience of more than 300.
“The consumer has already left home base. Can the Australian industry transform itself faster and more efficiently than other beef exporting countries?”
It won’t be an easy transition, he said.
“For farmers, the absolute question is are you a producer or are you a supplier?” Mr Whittle said.
“It will require significant increases in capital, costs, risk and management intensity.
“This is unappetising for most farmers and as a result few will shift without a price signal.
“The downstream players clearly want more farmers to take on a supplier’s attitude but don’t always appreciate the challenges of that transition and in most cases are reluctant to reward the farmers who do make that shift.”
Thus, the stalemate: The producers says: “The information is there and it is not being shared - we are not being rewarded.”
Those downstream say: “The producer is not accountable for what they supply and they don’t want to be. So the premium for the brand belongs to us.”
The stalemate has to be overcome, through relationships and improved commercial arrangements and a change in traditional attitudes, Mr Whittle argued.