Domestic beef market holds its value

19 Sep, 2016 09:28 AM

THE DOMESTIC beef market is proving the backbone of the game at the moment, holding its value despite price-driven declining consumption and stiff competition from alternative proteins.

Meat and Livestock Australia (MLA) estimates released this week has domestic expenditure on beef holding steady for 2015-16 at $7.83 billion, despite Australians actually consuming around three kilograms less per capita on previous year figures.

Australians ate around 25.4kg of beef per person in the last financial year, according to Food and Agriculture Organisation data, which still places us as the sixth largest consumer in the world.

MLA managing director Richard Norton said the stability in value was a sign that despite record high retail prices, there was a desire among consumers to continue to put beef on their plates.

Consumers consistently rated price as the most important factor when buying beef, he said.

“Clearly, the rising price of beef has presented a challenge to the household budget - it was always going to have an effect,” he said.

“However, it’s a positive sign that while consumers might be buying a little less beef right now, they are prepared to pay a little more to keep it on the menu.”

Global price signals indicated there may be some easing in domestic beef prices in the near future but currency rates would be key, Mr Norton said.

Ten years ago Australians’ consumption of beef was 38.1kg and in the the late 1970s, it peaked at 70.3kg.

The decline, however, is in line with similar trends in other western countries in response to the relative costs of alternative proteins.

Mr Norton said demographics today were dramatically different to what they were 40 years ago.

Underpinning MLA’s strategy to address declining consumption was investment in consumer insights research that was larger than it had ever before been, he said.

Targeted, sophisticated marketing was critical, he said, and young males was one area that MLA was currently focussed on.

“This is a market that has traditionally evolved into our most loyal consumers, but is today being swamped with conflicting messages, ” he said.

“We’ve looked to use their medium, and their talk, to promote red meat’s role in dietary guidelines.”

Another positive sign was beef’s rating among consumers as the highest offering for consistent quality, Mr Norton said.

Independent data from Millward Brown showed 54 per cent of consumers perceived beef to be of a consistent quality standard, compared to 50pc for chicken and 39pc for pork.

Animal protein analyst with agribusiness specialist Rabobank Matthew Costello said the average quarterly Australian beef retail price had risen by 23pc between 2013 and June this year, compared with a 5pc drop in poultry.

High cattle prices were challenging the purchasing decisions of consumers, he said.

“The US, where beef cattle prices have fallen by 42pc from their late-2014 peak, provides an interesting case study in this regard, highlighting the push-back from domestic consumers in response to high beef prices,” he said.

“While we don’t believe the Australian industry will show the same outlook as that of the US - in terms of the speed and degree in which farmgate prices declined - it does highlight how quickly unsustainable pricing can place pressure right along the supply chain.”

Fast Facts

THE strong performance of the beef’s value on the domestic markets was one of the highlights of Meat and Livestock Australia’s latest snapshot of key industry statistics.

It’s Australian Beef Industry Fast Facts 2016, released this week, shows our national herd currently sits at 27.4 million head, which includes 2.8m dairy cattle.

Queensland accounts for 11.3m head.

The cattle industry involves 58pc of all farms with agricultural activity.

Australia now has approximately 3pc of the world cattle and buffalo inventory, with India, Brazil and China taking the top three places.

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Shan Goodwin

Shan Goodwin

is the national beef writer for Fairfax Agricultural Media.


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