The Australian meat industry, a complex Business! Part 1. Herds

This is a series of my view (a cattle producer) of the impact of different factors that affect the meat industry concerning animal production, red meat processing  and live export. I have purposely concentrated on cattle as I have very little experience with sheep.

I have tried to keep this as simple as I could but the meat industry is a complex system and one influencing factor rarely works in isolation, at times many come together and create the market forces in which we operate. Some factors are local others national and global. They can be personal, climatic, environmental, government and economic.

I have intended these writings as very basic descriptions of just some of the market forces in which the meat industries operate in Australia.

The figures I have used to construct the graphs are actual head of animals or actual slaughter rates, I have tried to avoid using trend or adjusted analysis figures as some of the graphs I sourced are not directly comparable due to changes in scale and the unknown quantities of the averaging techniques. Due to the length of time periods involved, some entities even changed their methods of trending and seasonally adjusted figure calculations, I therefore felt the actual figures were more reliable to illustrate in graph form.

Not all vertical scales on the graphs are the same so be careful when comparing one to the other.

I have listed some important factors affecting the various aspects of the meat industry, they are in no particular order of importance and I’ve likely overlooked others.

PART ONE- Australia’s National Livestock Herds.

Cattle

Figure 1 – Australian cattle herd population. Is the basis of where all livestock are sourced for slaughter, trading, sale, purchases and export.  This graph represents all breeds and is both beef and dairy herds.

Herd charts 001 Cattle 1971-2011_edited-1Figure 1 – Australian cattle herd. AT 2012 it is estimated that the herd is 28.5M, Estimates for 2013 have increased this to 31M.

Figure 2 – Where  the cattle production areas of Australia are. The following diagram is from a Meat and Livestock Australia  website, it is national figures of beef herds in each state.

LE 2012 001Figure 2 – National cattle numbers. Source MLA fast facts 2012. Australia’s beef industry.

Statistics concerning the Australian Beef industry

  • Australia has 3% of the world cattle inventory following India, Brazil and China(2011)1
  • Australia is the 4th largest beef producing country, Beef being the end product we produce (2011) following Russia, Pakistan and Mexico in that order.1
  • There are 79,322 agricultural properties in Australia (2013) involved in beef production2
  • The total area operated by farms with beef cattle and sheep production is 53% of Australian land mass1
  • Beef production is conducted on 332 million hectares of land (75% of all agriculture land) in Australia3

Dairy systems in the Australian cattle herd. – At 2011/12 there are 1.63 Million cows in the dairy herd, the average herd size is 240 cows and directly employs 50,000 people4

Figure 3 – Dairy herd population. I included this graph to illustrate the diminished farm numbers that now operate as dairies. The notes accompanying the figures for this chart stated “falling farm numbers do reflect a long-term trend observed in agriculture around the world, as reduced price support and changing business practices have encouraged a shift to larger, more efficient operating systems”5

Herd charts 002 Dairy_edited-1Figure 3 – Australian dairy herd

Figure 4 – Australian sheep livestock herd. – This graph represents all sheep flock populations, for both wool and meat production.

Herd charts 003 Sheep_edited-1Figure 4 – National Sheep flock.

Figure 5 – National sheep and lamb numbers and where they are produced across Australia.

sheep population 001Figure 5. National Sheep & Lamb numbers. Source – MLA fast facts 2012. Australia’s sheepmeat industry

Statistics concerning the Australian sheep industry

  • Australia produced approximately 7% of the world’s lamb and mutton supply in 20109
  • 43,828 properties support sheep and lamb production (2010/11)9
  • The sheepmeat industry accounts for 32% of all farms agricultural activity9
  • The total area operated by farms with beef cattle and sheep is around 53% of the Australian land mass9

Figure 6 – These charts I have included as I thought they were  interesting in regards to the voltility of the herd  changes and the fact there was such a long historical record of them.

sheep population 002Figure 6 – National Livestock herds dating back to 1890. Source – ABARES Year Book 2012

Where the cattle production areas exist.

Figure 7 and 8 are from a 2006 report compiled for DAFF to consider dynamics of the Australian beef cattle herd in relation to movement and in particular transmittability of diseases through regions by disease’s such as BSE(Bovine spongiform encephalopathy) if such an incursion was to happen. Part of that research was to define the beef production regions and the activities the producers in those regions undertook. To Look at a region you will need to look at figure 7 key to production sectors to compare to the chart and then the map at figure 8.

Herd charts 006

Figure 7 – Production sectors chart of Australian beef cattle herd. Source A review of the structure and dynamics of the Australian beef cattle industry. Ausvet. 2006

Herd charts 005Figure 8 – Production sectors map fro beef cattle.

Produce of cattle and Sheep.

I have looked at the actual red meat production in more depth in the Part 2 – Red Meat processing.

I have looked at the Live export industry in more depth in Part 3 – Live export.

The beef cattle herd is mainly aimed at producing just that, beef.

But within that herd are producers who also supply other producer for breeding and stocking, feedlots and like myself supply live export.

Figure 9. Beef Cattle farming products and services.

sheep population 003Figure 9. Beef cattle farming products & services. Source IBIS Industry report A0142. July 2013.

Note this chart was in a report that was collecting information on properties who’s sole enterprise was beef cattle production.

Figure 10 – Sheep farming products and services.

Herd charts 004 sheepFigure 10. Sheep farming products & services. Source IBIS world Industry report A0141. March 2013

Note this chart is from a report who was collecting information on properties who’s sole enterprise was sheep production

Factors affecting animal production systems

Figure 11. Australian cattle herd and some important influences that have affected production. This chart is the exact same statistical chart as figure 1. The linier trend line is to show an average of progression and shows the herd has increased slightly over the whole period to  2011.

Herd charts 001. cattle. labelled_edited-1Figure 11 – Australian cattle herd. Notations of some influencing factors.

If a property has a breeder herd, the fertility, weaning rates, mortalities and ability to carry the stock will affect the numbers available for turnoff for sale.

Drought – Statistically it is very difficult to define drought, especially in a general sense across the whole country so I have generalised the periods affected. When periods are seen to be getting drier and depending on feed availability often numbers to slaughter will increase as stock are offloaded to ensure the breeder herd or production base animals are maintained on property. If it is a prolonged dry period the actual breeder herd may diminish as further stocking rates are reduced and cows are slaughtered. After a drought period has broken with rain, producers will tend to hold onto all reproducing stock in an effort to regain numbers or allow weight gains. During severe droughts female herd numbers will be affected.

The following graph is an illustration of changes in the types of animals within the National herd.

Figure 12 – Adult female cattle in comparison to male cattle. Very generally the national herd consists of about 40-50% females. While obviously bulls are required for breeding it is the gross female numbers that will determine the herds stability. If large volumes of female, particularly reproductive age ones are slaughtered or die the long term effect is generally a reduction in numbers in immediate following years, until they are replaced the volumes will not be rebuilt. Notes accompanying this graph state “Drought conditions in 2003 and 2010(inclusive) induced a contraction in numbers. The National herd is expected to recover in 2011/12. It can be seen that in 2008 the female herd had started to rebuild”10

LE 2012 001Figure 12 – Australian beef herd, female/male numbers. Source – An economic analysis of the live exportation of cattle from northern Australia. ACIL Tasman. 2012

Drought has affects in the supply chain of both inputs and outputs. If the cropping people are having very dry periods, fodder restrictions may occur in the form of hay, grains and produce, this may affect the number of animals in feedlots due to actual feed and cost of feed.

BTEC (Brucellosis and Tuberculosis Eradication campaign) – Probably impacted greater on Northern properties than southern.

Pre BTEC unmanaged herds were harvesting operations. Animals that were sellable were sent straight to any available slaughter point. Due to the requirements of BTEC if an animal couldn’t be caught and tested ‘TB free’ then it was shot. If caught it had be tested clear to be kept or forcibly sold. Many animals during this period were required to be sold due to their TB status and not due to management culls or choice of sale cattle which is the case in other  years outside of BTEC.
Post BTEC herds became controlled with infrastructure and the northern breeding programs moved from predominately short horn types to Brahman crosses and full bloods. Management changes vastly improved herds in handling, temperament and genetics. Following the BTEC period herds are consistently mustered with emphasis on weaning and controlling the breeding types used.

Vaccinations / supplement / Advances in pest control. – In my mind vaccination of botulism is the most important aspect of a northern herds health, prior to its use and when botulism was first observed in the late 70’s and early 80’s the mortality rate of livestock and detrimental affect on fertility was extremely high. In some documented cases with mortality rates as much as 40% of the herd, particularly in years combined with poor seasonal conditions. Supplementation, phosphorus and urea have lifted fertility rates and general health of animals. Pest controls for ticks, buffalo fly, worms, and parasites have been introduced. Predator controls used for wild dogs affect mortality, health and vitality of animals and have important ramifications in regards to sale animals and production animals.

Beef Industry rationalisation. Following the Beef crash and subsequent drought period which caused massive losses of the national herd. Slaughter numbers were also affected. At the time many abattoirs were owned by government, particularly in QLD. These were sold or closed to encourage competition amongst private enterprises. Many plants were closed due to operating inability to keep up with required standards of export and hygiene regulations. A number of new overseas investors entered the market operations during this period. While some plants closed others amalgamated and became larger scaled operations.

Enterprise bargaining. Bargaining with unions concerning working arrangements at times was very chaotic during the late 80’s and early 90’s. Other factors affecting productivity occurred through this period such as advancement in technology and information.

Australian Herd structure. Many reports like to compare the live export figures as a direct relation to the closure of abattoirs in Australia due to the view that the animals that went to Live export were somehow diverted from Australian meat processing facilities. I don’t believe it is that simple a correlation or as direct. 92% of Australian cattle sold from properties are processed in Australia7, most slaughter animals are sourced from below the tropic of Capricorn. North Australia may produce 38% of the current cattle production in Australia from 7003 properties above the tropic of Capricorn2. These animals were bred for the live export markets.

In my opinion Australia can be currently regarded to run two main breeding herds, that of Bos Indicus in the North and Bos Taurus in the south. Particularly since the early 1990’s. In my view the development of the live export industry has assisted in stabilising the national herd of Australian cattle, currently making up about 25% percent of the overall Australian herd of about 6.5M head. There is absolutely no way the current north Australian cattle  industry would have invested, developed and improved cattle herds in the north, over the last 20-30 years without profitable markets being developed such as live export.
Other stabilising factors in the Australian herd are better management techniques, extensive use of better feeding systems, including feedlots and better understanding and management by producers across Australia in understanding the processes and pressures involved in their production systems. Like nutrition requirements, pasture abilities, disease and management of animals.

Type of country – the furthermost northern parts of Australia are more suited to breeding cattle but not fattening and finishing them to slaughter heavy weights which are preferred for slaughter processing in Australia. The ability of an area to fatten and finish cattle in say Victoria is vastly different to the finishing capabilities of land near Katherine (NT). For instance an animal that could be targeted to 500kg live weight may achieve that in 18 months to 2 years or less in Victoria but take 4 years in Katherine. With animals being finished in feedlots predominantly now slaughter weights are often aimed for inexcess of 600kg. The type of animal in breeding and meat production such as marbling content being very specific to some markets.

Southern areas may be able to produce an animal that is specifically directed to a requirement of market needs, transport access to feedlots and abattoirs being within close proximity.

Northern properties that supply to live export largely supply lighter animals for the export market to feed further before slaughter.

Adaptability of the animal type to land type and environment. – The average property size across north Australia is 46,869 ha, the south 6141ha, average herd size up north is 3045 head, south 449 head7. The dominant herd is Bos Indicus (Brahman and crosses) up north, south is Bos Tauras (Angus, Hereford). North Australia has higher humidity and generally higher temperatures for longer periods. The south has lowe humidity, with a greater temperature range from very hot to very cold.

Adaptability of land type for other uses – Land systems due to their climate, rainfall, topography, soil type and accessability may have many uses or single uses. A producer in Victoria could produce cattle, but also sheep, cropping and horticulture. They may be able to focus entirely on one production system or a number of. Even alternating between types depending on their operations in a relatively short space of time. Properties in the Far north tend to be solely focused on cattle production, over open grazing systems in larger areas. They usually lack the ability to diversify into other production areas.

Other factors that have enabled a more consistent national herd volume and have had major impact on production capabilities throughout Australia. I have mainly concentrated on those prominent in the north.

Knowledge/Education/Information

  • awareness of environmental sustainability practices, in relation to stocking rates, carrying capacities, assessment and monitoring of land condition and other factors as a whole process of the production and ability of land, animals and resources.

Development of technology

  • Poly pipe. has allowed more efficient use of water and watering facilities for stock
  • Drilling technique for drilling bores enabling reliable water availability,
  • Fencing, portable panels, crushes, all these add to efficiency, ability to handle and ease of handling stock.
  • Mustering techniques – aerial mustering, efficiencies increased with accessability and techniques used like traps.
  • Transport to market – As the road trains developed so did the distances increase in which the animals could be carted efficiently, safely and faster.
  • computer based programs – enabling mapping, information sharing and analysis

Changes in markets / producers actions

  • As one commodity ie beef production may wane or improve producers may concentrate on beef production or move into other areas such as sheep, cropping or others. When the wool crash occurred in 1989, some producers changed from wool producers to sheep meat producers, some move into cattle production and left sheep all together.
  • Vertical integrated system development along the production to processing lines in which co-operation occurs from producing property to feedlot to abattoir.
  • Horizontal integrated system development along similar industry stages. Such as a producer buying more land to do the same task of production but creating larger economy of scale and operating costs.
  • Major market upheavals can occur –such as the Beef crash of 1974. A World oil crisis occurred in this period which caused the loss of both the USA and Japan markets literally overnight for Australian exports due to a collapse in commodity pricing. Coupled with a severe drought some of the herds across Australia diminished by 60% through natural mortality and enforced destroying of stock. Market prices had collapsed across the board for stock.

Finance

  • Willingness to take on debt, by producers and banks willingness to lend.
  • Ability to access many types of finance, loans, mortgages to machinery and finance packages, lease, term payments and different options to repay and redraw money if and when required.
  • Investment by large corporations & superannuation funds

Sources.

ABARES – Australian Bureau of Agricultural and Resource Economics and Sciences

ABS – Australian Bureau of Statistics

Figures

  1. Australian Cattle herd. ABARES. Agricultural Commodity statistics 2012.
  2. National Cattle numbers. MLA fast facts 2012. Australia’s beef industry.
  3. Dairy Herds. Cows and Farms. Dairy Australia.
  4. Australian sheep herd. ABARES. Agricultural Commodity statistics 2012
  5. National Sheep & Lamb numbers. MLA fast facts 2012. Australia’s Sheepmeat indsutry
  6. Historic livestock herd – Cattle & Sheep. ABS. Year Book 2012
  7. Production sector of beef regions. chart.’A review of the structure & Dynamics of the Australian Beef cattle industry’ Ausvet Animal health services June 2006.
  8. Production sector map. ‘ A review of the structure & Dynamics of the Australian beef cattle industry’ Ausvet animal health services. June 2006.
  9. Beef farming products & services. Beef Cattle farming in Australia IBIS Industry report. A0142 July 2013
  10. Sheep farming products & services. Sheep farming in Australia. IBIS world report. A0141. March 2013
  11. Australian cattle herd, with influencing factors. ABARES. Agricultural commodity statistics 2012. Influences by author – Jo Bloomfield. 20.07.13
  12. Adult female cattle. ‘An economic analysis of the live exportation of cattle from Northern Australia. ACIL Tasman October 2012

Writings.

  1. MLA fast facts 2012. Australia’s Beef Industry.
  2. ‘Beef Cattle Farming in Australia – A0142. IBIS world Industry reports. July 2013
  3. Australians supporting Beef farmers. 14.06.11
  4. Dairy at a glance. Dairy Australia.
  5. Dairy Cows and Farms. Dairy Australia
  6. ‘Structure and Dynamics of the Australian sheep population Hassell. 2006
  7. ‘Industry facts and myths busted’ Northern Territory Cattleman’s Association. 24.05.13
  8. Fact sheet. Save live export facebook.

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