Australia Remains Efficient Beef Producer on Global Scale

The Cattle Site, 16 January 2017

AUSTRALIA – According to the latest agri benchmark results, the results were varied somewhat across the globe, but it is clear that Australia remains an efficient beef producer, with a moderate to low cost of production.

While cow-calf enterprises were generally profitable in 2015, cattle finishing was not, although it had improved from 2014 levels.

Typical Australian beef farms achieved the highest levels of profitability since 2006 and were mostly profitable on both a short- and medium-term basis in 2015, but only two of the eight systems being monitored were profitable in the long-term – given Australia’s relatively high opportunity costs of land and labour.

Australia has moderate to low calf weaning rates and cow herd productivity, compared with similar systems.

The report also shows that Australia achieves moderate-to-high weight gains in southern farming systems, but low gains in extensive northern systems.

In 2015, Australian cattle prices rose appreciably, partly catching up on earlier global price rises, following the impact of the prolonged 2012-2014 drought (cattle oversupply) and a high A$.

Other findings in the report include:

  • Global beef prices were generally on the decline into 2015 in USD terms, but rose in local currency terms, which highlights the effect of a rising USD.
  • Few countries can boast long-term profitability in beef production at present, though higher beef prices improved results for Australian farms in 2015, whereas globally, profitability fell marginally for most countries.
  • This, together with continued climate volatility (especially drought) and growing resource and environmental constraints, suggests that global beef supply response will be moderate, and are unlikely to lead to a major beef price over-correction (as earlier global cattle production and price cycles have).