Please enable Javascript

Beef boom good for farmers, tough on processors and meat eaters

High prices can't be passed onto customers otherwise they'll turn to pork or chicken

by Susanna Freymark, 08/04/2021, 4 min read

THE cost of a decent steak has risen. Not nearly as much as it could have – given the price of beef on the hoof today.

As with real estate, it isn’t necessarily a good thing when beef prices rise so much.

Producers may be getting the best price for their beef but if they’re restocking the herd, they’re paying top dollar for any bought animals.

This is a beef boom that doesn’t benefit the beef food chain and the meat processors and consumers are the ones bearing the brunt of the high cattle prices.

The Northern Rivers Livestock Exchange's operations manager Brad Willis said many of the producers were happy, though.

Farmers who restocked during the drought were reaping the rewards of the average saleyard price for cattle of $1465 a head.

“If you sold stock during the drought, it is exceptionally difficult to buy into the market at the moment,” Mr Willis said.

Prices were moving above the previous record of an average $3/kg in 2016, since February last year. At the NRLX Wednesday sale the top price was $7.98/kg.

Auctioneers at the the NRLX in Casino. Photo: Susanna Freymark

The cause of the price rise?

Rain – and lots of it.

“The price kick was attributed to widespread rain across Victoria and NSW,” Mr Willis said.

The prices will stay at a sustained high, he predicted, but not as high as we’ve seen in the past few weeks.

“The price in the yard has doubled but the price per kilo at the butcher doesn’t reflect that,” Mr Willis said.

“Processors are the ones who are tied to the price because of agreements they have.”

For Casino Food Co-op, the high price of beef means less is processed.

Chief executive Simon Stahl said there had been eight dry years in the past 10.

The current good cropping season meant producers could restock because they have grass feed, he said.

“The prices are unsustainable,” Mr Stahl said.

“$3–$4/kg is sustainable,” he said.

“The more beef goes up, people will substitute pork and chicken. “

He predicted prices would remain high for the next 12–18 months.

High prices as well as the covid impact on the export market has influenced the co-op’s production.

“We’ve lost people because we are working 3–4 days a week,” he said.

“There is a natural attrition and we need a minimum staff including skilled butchers.”

Casino Food Co-op has 1000 staff but not all are full time.

Greenmountain Meat owned by Kyogle’s David Scarrabelotti has fingers in every part of beef production including pastoral, distribution, trading and food processing. The company specialises in growing and sourcing naturally bred, naturally fed beef and veal that is processed at Coominya in south-east Queensland.

“We breed cattle and have 25 farms in Richmond Valley as part of the Greenmountain Group,” Mr Scarrabelotti said.

The Greenmountain processing plant in Queensland. Photo: Contributed

Current cattle prices were the highest he had ever seen.

“Our processing is running at 70% and we have been losing money for 18 months,” he said.

“The business runs as a group. When one part is having a tough time, the other parts support it.”

Mr Scarrabelotti said beef prices had risen for the consumer.

“As a meat processor there is only so much we can put on the price otherwise people buy chicken and pork.”

The cattle prices are created by beef producers, he said, and can only go down."

There are cycles and the nature of this country is drought, flood and fire and these cycles create the cattle price, he said.

“We rely on the export market and that has helped to keep the lid on the domestic market,” he said.

“The current price for beef is unsustainable.

“Like all markets, when you reach the top of the hill, there’s only one way to go – and that is down.”

THE NATIONAL MARKET

AUSTRALIA’S cattle herd is rebuilding and is expected to reach 26 million head this year. The 2021 slaughter numbers have been revised down to 6.3 million head.

Carcase weights have been adjusted up to 311.7kg/head to reflect the abundance of grass and increased proportion of grainfed slaughter.

Cattle producers are expected to experience the best spring in recent memory, according to Meat & Livestock Australia’s latest projections.

MLA’s Stephen Bignell said, “on the back of improved carcase weights, production has been revised higher despite slaughter (numbers) declining.”

“Slaughter is forecast to drop this year on the back of the national herd rebuild as producers retain more stock, however it is expected to pick up slightly toward the end of the year as more cattle come off feed.”

Rain events remain the key indicator of market performance, he said.

The National Medium Cow Indicator has risen 40c year-on-year, or 13%, to sit at 308c, with the National Heavy Steer Indicator up 100c, or 16%, to sit at 412c/kg lwt.”

As economies continue to recover from covid, demand for Australian beef should also increase, he said.

Casino Food Co-op chief executive Simon Stahl, Federal MP Kevin Hogan and former deputy PM Michael McCormack at the co-op trying some steak. Photo: Susanna Freymark