Livestock revival underway

11 Aug, 2004 10:00 PM

THE great livestock revival is underway and is sustainable, Rabobank food and agribusiness research head Ben Russell said.

Mr Russell said cropping had consistently outperformed livestock production through the 1990s in terms of profitability and return on investment.

As a result, the cropping area in Australia had increased from 10.1 million hectares to 19.5mha from 1992 to 2002.

In WA it jumped from 3.2mha to 4.3mha.

"It was at the expense of all livestock but particularly sheep, the (WA) flock went down from 34 million to 23 million in that time," Mr Russell said.

He said the situation had now improved and livestock was recording strong growth, while the grains industry had levelled out.

"Dairy and wool continue to have tough times but if you look at livestock overall, it is a pretty good time to be a grass farmer," he said.

He said strong international market growth, particularly in developing countries, was driving the revival.

"One of the key trends is that when countries are becoming more developed, they immediately want to spend money on quick sources of protein such as meat and dairy," he said.

He said annual global consumption of meat was predicted to increase from its early 1990s level of 193 million tonnes, to 300mt in 2020.

Dairy consumption would increase from 413mt to 645mt in the same period and growth would occur close to Australia, in China, India and South East Asia.

He said the market outlook for beef was positive.

"There have been very strong current prices, if you take out the 2001/02 slump as a result of the BSE outbreak in Japan, then it has been very strong for Australian producers since 2000," he said.

"US BSE has given us a big increase because they have been shut out of Japan, the biggest beef market.

"The only caveat on the beef market is the US will come back into the Japanese market, the only question is when.

"Lamb has been the success story in Australian agriculture over the past few years, it has recorded the double of growth in demand and production," he said.

There were amazing prospects in the American market but the domestic market had been the real success, growing by 5-10pc a year for ten years.

"Wool is a tough story, prices are going to continue to be disappointing in the

short term, in the long term we may look at increased promotion to increase demand," he said.

He said the price of wool was driven against the relative price of synthetics and most consumers were interested in fashion rather than fibre.

"That doesn't mean you can't make money out of wool, it means you're going to have to lower your costs of production faster than prices are dropping," he said.

Dairy continued to experience difficulties resulting from deregulation and the drought, but reductions in European Union subsidies and increased worldwide consumption could increase profits.



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