Chicken or the egg scenario for stock supply

21 Aug, 2014 02:00 AM
Comments
5
 
I suggest to take advantage of these good times, don't wait

WELLARD Group CEO Fred Troncone has told producers they must boost livestock numbers now, or risk missing the boat in terms of higher prices.

Mr Troncone was speaking at last week's Pastoralists and Graziers Association convention and said unless producers start restocking now, they could miss out on livestock price increases.

"Because when China opens its doors it will be too late," he said.

Mr Troncone's message was clear, "jump in early, as Australia will not have enough stock to reach the predicted large demand of China".

Mr Troncone said sheep were the safest bet as previous evidence had shown when the price jumped at the re-opening of the Bahrain market.

But PGA vice president and Kojonup sheep farmer Digby Stretch said he would want to see long-term contracts before boosting his numbers.

"The discussion definitely boosts confidence, but real confidence is built up by contracts and cash in the bank," Mr Stretch said.

"I can't go to the bank and say, 'I would like to buy some more lambs because I think this red meat thing will be really good'.

"The bank will say it's a good idea too, but they will ask for a contract to prove that the business plan is as good as I think it is.

"I like the enthusiasm out there, but none of that enthusiasm has replaced my car, or put my kids through school yet – nothing will do that except cash flow.

"Let's work hard in converting that enthusiasm into good solid business proposals."

Instilling confidence, Mr Troncone said the time was right, to take advantage of the good times ahead.

"We have the support from (Federal Agriculture Minister) Barnaby Joyce, he is committed to do right by us," Mr Troncone said.

"It's great to have him and the industry to manage these relationships.

"If China and Saudi open, prices will rise.

"I suggest to take advantage of these good times, don't wait because in five or six years you might miss the peak."

Although no one can predict the future, Mr Troncone believed the near future will be prosperous.

Mr Stretch said producers couldn't just switch lambing or calving on and off or the genetic quality of what they need to move and sell.

He said to make long-term decisions with the best of knowledge, producers needed long-term market arrangements with their suppliers and exporters.

"We will get a better result if we talk in longer time frames," Mr Stretch said.

"If we are going to pull this potential lift in market size and get the pull through from this demand all the way and make it work from the supply end, we are going to need a greater level in sophistication in how we deal between ourselves, at a farm production level and through the processors and exporters.

"Don't rock up on the day we are drafting to ask if we have a specific type, think about it around October to December, so we might be able to put it in the paddock for the following year."

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READER COMMENTS

Barcoo Battler
21/08/2014 6:54:50 AM, on Queensland Country Life

Hey Fred- let me tell you something that might help your understanding- It takes 9 months gestation then another 14 months to get a saleable item= 690 days You tell us how to do this when we have poor empty cows that have barely gotten over last years fiasco due to not being looked after properly due to abject poverty due to the worst livestock prices in the world while meat is selling globally at historic highs.Freddie old mate - you've killed the geese laying your golden eggs- so you are the chicken here!Find us $3 live and we might get out of bed for ya- otherwise -buy a place and breed
Philip Downie
21/08/2014 9:24:17 AM, on The Land

"A greater level of sophistication" what a joke the processors level is screw the farmer and take as much profit as you can. Then when supply is tight talk about relationships expecting farmers to again take less so the processors can survive, looks a bit one sided don't you think. Maybe the processors should have paid a bit more so feed could be provided and then we wouldn't have this roller coaster. The money is there just look at world prices. Processors the industries worst enemy, profit, profit, profit.
Rob Moore
21/08/2014 10:51:12 AM, on Queensland Country Life

Mr Troncone- when your best mate Mr Joyce passes the Primary Production Pricing Bill next year- Wellards will draw ALL the stock that are available by listing on the Offer board- specs,delivery piont, quantity of contract plus expiry date and pricing grids. Of course you will be competing from the national pool of cattle and you won't have any secured until your competitive offer is snapped up online by the producers.THEN and only then will you have to share the cream with us! Sounds fair doesn't it?Not afraid of competition tension are you with works, feedlotters........too bad!@#$%%^&*()!@
Beef man
21/08/2014 8:47:30 PM, on Farm Weekly

There is a pattern appearing here the average beef producer has been treated like peasants and have propped up inefficient processors for a long time how old is the average age of the producer it's around 60.
Beef man
21/08/2014 8:49:33 PM, on Farm Weekly

When times are tough these guys fleece us and tell us to become more efficient.

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