NSW Cattle producer John Carter in his tegular contribution “Straight Talking” writes:
Australian cattlemen are taking a bloodbath with the trade steer dropping over 20% in three months. Mainstream Rural Media is saying little or nothing as to the effects of government actions over the US Free Trade Agreement and inaction over our 2 supermarket “duopoly collusin” bites deeper.
We are constantly told that we are in a global market. Fine. Let someone step forward and explain the following?
* We are down to 53% of the US cattlemans 274 cents /kg. live price.
* Australian consumers are paying prices greater than US consumers.
* We are still to fill 30% of the US quota with only a few weeks left.
* Brazilian prices are at record levels with Angus steers selling up to 240 cents/kg. Live.
Reasons given by some:
Losing some of the Japan/Korea market back to the US despite our NLIS. It detailed the amazing ’side letter’Âť to the US Free Trade Agreement, which Minister Vaile signed. In it, he pledged, through the OIE (World Authority on Animal Health), to help the US get back into a BSE free Korea and to Japan.
This soon damaged our prices here and this intensified as Canadian beef began to flood back into the USA due to the USDA abandoning its role as guardian of US cattle health and caving into processor / political pressure.
We now have the results of the UK Governments trial and cost benefit analysis of the use of RFID tags in sheep. It strongly recommends against its adoption as it will make the UK industry uncompetitive in the EU—and not improves animal health trace-back.
Australia, the most disease free country in the world, is pricing itself out of the world market to please some bureaucrats, idiot ministers, their selected producer puppets and greedy tag / reader manufacturers.
“The High Dollar”Âť.
I have written for some 8 years about Australias galloping external debt. We have now reached $542 billion nearly $30,000 for every man, woman and child in Australia. The trade figures for the last five years have been abysmal in the midst of a mineral export boom we have had big deficits for each of the past 65 months.
The only way to keep international investors sending money to Australia to keep us solvent is by raising our interest rate. With New Zealand we now have the highest interest rates in the OECD and are closing in on Argentina.
A high interest rate means a high $Aus. Exporters are now in a catch 22 situation. As our debt increases, our interest rate must increase to attract lenders to carry our debt and our exporters become less competitive.
The drought.
This is a fair explanation for a drop in the price of light store cattle where feedlots are finding the price of grain too high and feedlot occupancy has dropped 25%.
However for finished cattle it is a real furphy—supermarkets are claiming that the drought is forcing the cost of their supplies UP as they push finished beef prices DOWN.
Unfinished cattle with some frame are ideal for the US market, which we can‘t fill despite their cattlemen‘s prices being almost twice ours! Give us a break!
Share of the Australian domestic consumer dollar NOT going to producers.
The feeder steer is the first price benchmark in the industry chain. US consumers have a graded product available, they pay LESS than Australian consumers and their consumption is HIGHER. The US has a Packers and Stockyards Act with rules for saleyards and for price transparency Australia has a rip offÂť rat race.
MLA (Meat & Livestock Australia>altered their measure of promotional success some years ago when they moved from the domestic consumption figure to an in house figure on money spent on red meatÂť. How this figure is arrived at is anybodys guess but their claim that more money is spent on meat meals each year is valid.
THE PROBLEM IS THAT THE PEOPLE PAYING FOR THE PROMOTION “THE PRODUCERS” ARE ACTUALLY GETTING LESS FOR THEIR PRODUCT. THE RETAILERS ARE GETTING A BIGGER SHARE OF THE CONSUMER DOLLAR WITH THE PRODUCERS PAYING FOR THAT SHARE THREE TIMES WITH CHEAPER CATTLE, WITH PROMOTION DOLLARS AND THEN IF THEY PURCHASE AS A CONSUMER!!
So What lies ahead?
1. The herd will not be rebuilt to 30 million. There may be small increases in the environmentally sensitive and widely indigenously held Gulf and Kimberleys. However this will be more than offset by native vegetation laws reducing development in Queensland and by permanent depletion in the south as the traditionally richer, safer, areas go under forestry, houses and alternate lifestyle blocks as is happening in Europe and the US.
Cows don’t survive on a ration of tiled roofs or pine trees! Australia reached its highest stocking rate in animals in 1977 and has been falling as humans have multiplied and replaced them ever since.
2. Feedlots face a frightening future with the drought and possible ethanol subsidies keeping grain prices at prohibitive levels. This applies, even more severely, to our main competitors for the consumer dollar pork and chicken. However, chicken has a production line that can pass on costs to the consumer better than the fragmented beef line. Imports may render Australian pork production a terminal industry.
3. World cattle numbers must fall as humans increase. More Chinese can afford beef but their Government is subsidising and protecting their industry and they are actually exporting more beef than they import.
4. The Australian dollar will be held at artificial levels with our very high interest rates necessary to attract capital to service our huge external debt.
