Producers lift volume on back of unprecedented forward contracts

15 Jan, 2016 01:00 AM
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Bindaree Beef's livestock manager Andrew Simmonds and chief executive officer Andrew McDonald at the Inverell facility this week.
Bindaree Beef's livestock manager Andrew Simmonds and chief executive officer Andrew McDonald at the Inverell facility this week.

NORTHERN NSW beef processor Bindaree Beef has moved into unchartered territory in terms of forward contracting in a bid to secure the type of supply it needs ahead of the forecast cattle shortage.

The family-owned abattoir at Inverell, which last year made significant steps to vertically integrate with the purchase of a feedlot at North Star and a merger with export meat marketer Sanger, is offering forward contracts out to four months and has taken that program as far afield as Central Queensland down to Southern NSW.

Andrew Simmonds, Bindaree’s Livestock Manager, said contracts covered a mix a of arrangements, from agistment and leasing to contract growing.

“The aim is to have at least 50 per cent of our kill, or 3000 head per week, under forward contract this year,” he said.

That would compare to a 2015 figure which stood at 33pc.

Bindaree is taking both new supply and expanding what is coming from existing suppliers as a result and says it is looking to talk to producers wanting to align themselves with a branded beef supply chain.

Mr Simmonds said some producers had lifted volume by 300 to 400pc as a result of the certainty of contract prices.

He said the business had never before offered contracts to this extent but it had become necessary under current industry conditions.

“Because Bindaree has become more brand-oriented over the past three years we are seeking specific cattle,” he said.

“With the purchase of the Myola Feedlot we have opened our parameters greatly and are now talking to backgrounding operations and breeders.

“We are paying Meat Standards Australia premiums across the board on all cattle and more and more producers are looking to take advantage of that.”

Mr Simmonds said the move was more about securing the type of supply needed rather than just numbers.

“What we’ve learnt about branded product is the vital importance of being able to supply the same item to the customer every week - consistency is key,” he said.

“Branded product is where Australian beef is headed.

“Producers need to know who their end market is.

“If a producer today is selling at the the farmgate not knowing where their beef is going, they are costing themselves a lot of money.”

Mr Simmonds can be contacted on 0267211411.

FarmOnline
Shan Goodwin

Shan Goodwin

is the national beef writer for Fairfax Agricultural Media.
Date: Newest first | Oldest first

READER COMMENTS

John Carpenter
15/01/2016 8:23:10 AM

Another processor touting "premiums" without disclosing the amount of these premiums or the publicly available reference price over which they are calculated.If processors or retailers make a general offer to buy cattle from the public it should be a legal requirement that this information be disclosed on their website.

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