WA rides high as beef prices soar

24 Apr, 2001 10:00 PM
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Special report

by TRAVIS KING

HIGH demand for quality store and grainfed beef cattle over the past six months has seen beef prices lift to all-time highs.

So good are prices, in fact, that many WA beef producers quit most of their cattle prior to Christmas or just after the new year period, with a large number of these cattle going as live exports.

Consequently, supply of store and grainfed cattle has been stretched, raising concerns about the ability of WA beef producers to fill this burgeoning demand.

Reports of grainfed steers making $924 a head in Mt Barker saleyards and selling through CALM for $3.31/kg, and store steers selling at South West saleyards for more than $600/head, are all indicators of the buoyancy in the beef industry at the moment.

Expanding export markets and a concerted push in promoting beef on the domestic front means optimism abounds in the industry.

If demand increases further both locally and abroad, as it looks like it will, there is doubt as to whether WA will have the cattle to meet these requirements.

Last year WA exported 322,659 head of cattle at an estimated value of $155-$160m.

These shipments comprised of 169,000 head from northern ports and 153,600 head from southern ports. Predictions are that these figures may rise for this year.

Fares Rural WA managing director Peter Lang said demand was currently strong for both processing and live export cattle.

"I think we will see these trends continuing for some time and I believe there will be strong competition for the cattle available in WA," he said.

"The BSE and Foot and Mouth problems in Europe have seen inquiry for Australian cattle increase, but at this stage that is all it is ‹ inquiry.

"There hasn't been an avalanche of interest and it hasn't transformed into actual business yet but there is interest there from countries that would normally source cattle from European countries."

Mr Lang said the supply of cattle was something of a concern to the exporter and they were having to go further forward in sourcing cattle.

"We have to cover our position," he said.

"The December-January period was very active for us and I think this will continue.

"Exporters will continue to source cattle out of the northern areas over the next few months.

"The pure geography of WA means that we are well situated to continue to supply south east Asian and Middle East markets."

To compete with the live export trade, WA's beef processors were forced to increase prices for weight and grade cattle, which again proved a boon for producers.

Consequently most store and grainfed cattle have already been turned off WA cattle properties, whereas in previous years there were still good numbers of grainfed cattle around at this time of year.

Factor in the effect that trees and the viticulture industry have had on reducing cattle numbers in the South West ‹ the traditional WA cattle grazing area ‹ and it can be seen why WA cattle are in short supply.

EG Green & Sons, WA's largest beef processor and this state's only licensed export abattoir, is also feeling the effect of the shortage in supply.

Chief executive officer Gary Minton said that the tremendous increase in live export had made it difficult for the plant to procure cattle for both the local and boxed beef export market.

"At this stage there is room for both the boxed beef trade and the live export trade but I am not sure whether we are operating on a level playing field," he said.

"Government subsidies ‹ both locally and overseas ‹ offers assistance to the live export trade, but this assistance does not extend to boxed beef exports.

"Both live export and chilled export are important to the WA beef industry as they give beef producers options and create competition in the marketplace."

Mr Minton said numbers of cattle processed this year were similar to last year, but figures for both years are down on previous years.

"There has probably been a 6-7pc drop in numbers, and while that doesn't sound a lot, in this industry margins are very slim and so it is a significant decrease," he said.

"The effect of the drop in cattle numbers, combined with live trade, has meant our off-season has started a month earlier this year.

"Normally things quieten down in March but this year numbers started to drop off in February.

"During the peak season we would process 5000 head a week and at the moment we are down to 2500 head."

Mr Minton believes a further increase in live trade would make it all that more difficult for processors to survive.

"With less cattle going through our plant, the money injected into the WA and local economy is reduced," he said.

"At the height of the season we would employ 600 people and in the quiet period 320-330 people, which we estimate puts $20m into the local economy."

Mr Minton said the more cattle that are processed in the plant, the more competition EG Green & Sons could offer to the marketplace.

"The more cattle we put through the better, because it allows us to upgrade our plant, enabling us to become more efficient, which in turns enables us to compete on price," he said.

"At this stage I am confident that we will be able to compete on price with the live export trade and continue to give farmers options for the sale of their cattle.

"At the end of the day though there is no short term solution to the problem, the only solution is for WA to increase its herd size."

Goodchild Meats cattle buyer Jim Goodchild agreed with Mr Minton, saying that cattle numbers in the Wheatbelt need to increase to avoid pressures on processors.

"We source cattle from all over the state but mainly from the South West and herd size has definitely decreased due to the impact of trees and viticulture," he said.

"There are just no grain fed cattle around at the moment.

"We are feeding 2000 head ourselves whereas in previous years we would feed half that number.

"All the cattle that would normally go into feedlots have gone in November-December on boats."

John Roediger, Roediger Bros, Northam, said the live shipping trade has had an effect on the market because numbers have been cut down and price has been pushed up.

"We are not getting the throughput that we would normally have because the demand for the beef is not there at the moment on the domestic market," he said.

"This has had a big impact on the wholesale market and it is just starting to come through on a retail basis."

Mr Roediger said throughput at his plant is down 10-15pc on normal, but at the same time opportunities have opened up for his operation.

"We haven't sold meat to the east coast for three years, but due to the shortage of cattle over there and pressures on price they are sniffing around over here looking for cheaper meat," he said.

"We have sold broken meat cuts of varying quantity and quality to that market."

Mr Roediger also believes that current prices have been a catalyst for an improvement in the quality of the beef WA produces.

"Beef producers are getting rewarded for breeding a quality product and they are meeting specifications to gain premiums," he said.

Mr Roediger said the number of grainfed cattle around was starting to drop off quickly.

"There are still a few around but I think come July and August they are going to be in desperately short supply," he said.

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