August 23, 2004

 

 

Australian Cattle Industry To Grow Strongly

The future looked bright for the Australian beef industry on the back of strong demand and the nation's food safety reputation. Meat and Livestock Australia (MLA) revealed this in its mid-year update on the cattle industry on Monday.

 

But the organisation warned that Australia's reliance on just four key markets left the industry vulnerable to external shocks.

 

MLA chief market analyst Peter Weeks said the absence of the United States from north Asian markets - due to the fallout from last year's mad cow scare - had boosted demand for Australian beef and lifted prices.

 

Exports of Australian beef to Japan are expected to be up 100,000 tons to 375,000 tons this calendar year.

 

"Cattle and beef prices are currently close to the 2001 records. 2004 production is up, feedlots are close to capacity for export and beef exports are high," Mr Weeks said in a statement.

 

"While US beef is unlikely to re-enter the Japan market this year, a sharp correction in export flows and prices is expected once they do.

 

"However, prices are likely to remain above historical averages."

 

Mr Weeks said even when the US re-enters the north Asian market, strong demand in America would ensure the impact on Australia would be minimal.

 

He said continuing demand by Australian consumers, in addition to new markets could lead to beef exports breaking the one million ton barrier by 2008.

 

The previous best export performance was in 2001 when exports hit 950,000 tons.

 

The only short-term problem is the continuing fallout from the drought.

 

"Despite expected favourable cattle prices, the legacy of Australia's three year drought will hold back beef farm incomes over the next few years, due to lower cattle sales and the high cost of replacement stock," Mr Weeks said.

 

The total number of cattle sent to the abattoir is expected to fall slightly this year, but better weight is expected to boost overall beef production.

 

The biggest threats to the industry continue to be actual food safety incidents, such as the mad cow discovery which hit the American beef industry.

 

A return of drought, a substantial increase in the value of the Australian dollar and a resurgence by South American beef producers could also cause problems.

 

Mr Weeks said as Australian beef producers relied on just four markets - the US, Japan, South Korea and domestic - it was vulnerable to unanticipated event.