Rebuild the time to reassess

Rebuild the time to reassess

Beef
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Once-in-a-generation opportunity to shape future of beef: Rabobank

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NEVER has there been a better opportunity to weigh up target markets, reset genetics and reassess production systems for those supplying beef to a world likely to be wanting it in greater volumes and with far more specific demands.

So says agribusiness lending specialist Rabobank in its Beef Seasonal Outlook for 2021 report, which points to the herd rebuild as presenting a unique chance for both individuals and the industry as a whole to become more focussed and strategic.

Australia's position in the global protein world has to be factored into all decisions made now, the report recommends.

It asks: Are we going to be a supplier into high-quality niche markets, a commodity supplier of lean beef to global trade, an exporter of live cattle or an exporter of value-added beef to trade markets?

Report author and Rabobank senior animal proteins analyst Angus Gidley-Baird said it's not just producers, but those all along the supply chain who now have before them the opportunity to consider where their operations best fit and what direction they want to take for the next 20 to 30 years. That's how long, at least, decisions taken today will influence businesses.

These are decisions to be taken at an individual level - perhaps generating a niche article and pushing that onto the market - or as a larger collective, such as the organic movement, he explained.

Or it could be driven by processors and exporters with branded products.

The overarching concept is that as breeding cattle numbers recover in the year ahead, the future of the industry will be shaped. Cattle numbers are rebuilding from the lowest levels seen in more than 30 years on the back of much-improved seasonal conditions.

"That's not to say change is needed but rather this is opportunity to assess what is the best pathway to building a sustainable basis for business in the future," Mr Gidley-Baird said.

The report outlines a picture of strong support for the cattle market based on very limited supplies and high demand.

That's not news to producers, nor is the warning about the flow-on effect of that situation to those further along the supply chain such as feedlots and processing plants in terms of challenged capital efficiencies as they navigate running below capacity.

But as beef available to export drops - both live export numbers and boxed product is forecast to decline by five per cent this year - the dynamics of the trade, and the market signals to producers, could well shift.

ALSO SEE: The changing face of beef exports

The Rabobank report says Australian exporters will need to make tough decisions that accommodate short-term commitments but also foster longer-term trade relationships for when volumes recover.

It points to improved economic conditions and a recovering food service sector delivering positive demand but COVID, African swine fever, freight issues and trade tensions remaining risks which could be disruptive.

As exporters take stock of emerging global opportunities and threats, and assess where competition is ramping up and, equally, where new doors could be opened, they will be looking for suppliers who can consistently deliver.

"We think the bid for market diversity will be more prevalent at the processor end of the supply chain and from a production point of view, it will be more about consistency of supply and a better understanding of where the end product goes and what the consumer is looking for," Mr Gidley-Baird said.

He said feedback coming through Rabobank's channels showed many new approaches were being considered by producers - some are indeed considering big changes while others are fine tuning or dipping their toes in new markets.

A fairly consistent theme is a more conservative approach to stocking rates.

There is also indication breeding replacements is the preferred option for producers across the country.

"The question producers are asking is how does my operation fit into the markets I want to supply to for the next few decades," he said.

"Decisions taken this year are not just about whether to restock at high prices but also about which genetics, production systems attributes, feeding regimes, supply chains and end customers are needed to build sustainability into their operations."

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The story Rebuild the time to reassess first appeared on Farm Online.

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