Beef farmer Bill Bray on his property at Walkerville. Beef prices have hit a record high. Photo: Justin McManusCattle prices have hit a record high as surging international demand for Australian beef combines with drought – at home and abroad – to push up prices.
The spike in prices, which some observers tip will rise further still, has been attributed to surging demand in America, China and other Asian markets, and is generating optimism in an industry that endured many years of low prices at the same time as rising production costs.
A key industry index measuring cattle prices in eastern Australian markets smashed the $5 per kilogram mark on Wednesday, the first time it had ever broken $5.
Severe drought in America has smashed American cattle producers and dramatically lifted both demand and prices for Australian beef. And severe drought in cattle producing districts of northern Australia has also reduced herd sizes, led to less cattle being available for market and pushed up prices.
While returns are up for farmers with cattle to sell, it means Australian consumers have faced higher prices for beef at the cash register. According to the Australian Bureau of Statistics consumer price index, beef and veal prices rose 12.2 per cent between the September quarter of 2013 and the March quarter of 2015.
Beef producer Bill Bray, from Walkerville in South Gippsland, said prices paid to farmers were “much improved” on where they had been over the previous five years.
When he recently sold some cattle, his 15 and 16-month-old steers averaged about $1200 per head. Twelve months ago, the same animals – same weight, same specifications – would have sold for only $800-900 each, he said.
Also this month, an older cow set an all-time record for the experienced beef farmer. “I sold some beef cows last week, the heaviest cow made $1463. I’ve never got that (before) for a cow,” he said.
Mr Bray believes the strong prices are sustainable, and that the depreciation in the Australian dollar was a significant help. “I think the outlook’s positive and strong. There still seems good demand from the processing sector here,” he said.
“People are starting to understand the benefits and the strengths and the pleasure of eating pasture-fed beef. So there’s strong demand from America. The Americans are wanting to buy natural, pasture-fed beef burgers,” he said.
Australia’s clean-green image, and respected food safety systems, were an enormous help in foreign markets, he said. “It’s very positive being an island country.”
Ben Thomas, from the industry group Meat and Livestock Australia, said Australian producers were benefiting from “unprecedented global demand,” in an environment where Australia exported about 70 per cent of all beef produced, he said.
The fall in the Australian dollar had also helped. “The Aussie dollar is much weaker now compared to where it was last year, and especially when you compare it to two or three years ago. It just makes our product that little bit more competitive,” he said.
He said beef production in America was “at a 20-year low”.
“The prices are great and, yes, the outlook for the next couple of years is very good,” he said.
Brent Finlay, president of the National Farmers Federation, said demand in China for Australian beef was “red-hot”, and welcomed the strong prices. “I think the outlook is potentially for them to get even a bit better,” he said.
But Mr Finlay cautioned that despite the high prices, drought meant that some Australian beef producers simply had no cattle to sell. “Unfortunately not everybody is able to take advantage of these prices,” he warned.
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