- The Beef Cattle Industry Profile provides an overview of the location, structure and financial performance of Victoria's beef cattle industry.
- The beef industry is Victoria's second largest agricultural industry, with a gross value of agricultural production of around $1.38 billion.1
- Beef cattle numbers in Victoria have fallen from 2.78 million in the early 1980's to 2.41 million in 2011.2
- Domestic consumption of beef during 2010-11 was approximately 33 kilograms per capita, having declined from 34.6 kilograms in 2009-103.
- The beef cattle industry is Victoria's most geographically extensive industry.
- Japan is the largest market for Australian beef taking 351,388 tonnes worth $1.69 billion in 2011. The second largest market is the USA taking 160,000 tonnes worth $708.8 million in 2011.
- The value of Victorian fresh, chilled and frozen beef and veal exports was $676 million in 2010-2011 – 13.2 per cent of the Australian total of $5.08 billion.
This profile draws upon data from the Australian Bureau of Statistics Agricultural Census.
Location of Victoria's Beef Cattle Farms
Beef production occurs across all regions of Victoria, but it is predominantly located in the Western District, Gippsland, Ovens Murray and Goulburn regions.
Figure 1 - Victoria's Beef production regions2
Structure of Victoria's Beef Cattle Industry
In 2009-10 there were 15,107 agricultural properties carrying just on 2 million beef cattle. Of these, 8,763 were specialised beef cattle farms and 1,490 were mixed beef/sheep farms. The number of beef cattle in Victoria has fluctuated between 2 and 3 million over the past 30 years (Figure 2). At June 30 2011, Victoria had approximately 2.41 million head of beef cattle.
The number of Victorian farms has fallen over time from around 70,000 in 1969-70 to 32,741 in 2009-103.Over the same period average farm size and herd size have increased. These trends are reflected in the beef industry where the average Victorian beef farm area has increased from less than 300 hectares in the 1960's to around 980 hectares in 2010-114.
While most of Victoria's cattle are kept on managed pastures, around 10 per cent of the beef cattle herd is grown out in feedlots. This is a lower proportion than goes to feedlots in Queensland and New South Wales. Victorian feedlots are predominantly geared to produce beef for the domestic market, with shorter feeding regimes and higher turnover rates compared to feedlots in Queensland and New South Wales. There are 24 feedlots accredited under the National Feedlot Accreditation Scheme – (operators must be accredited to export beef) – and approximately 250 small unaccredited feedlots in Victoria5.
The number of cattle on feed in Victoria during the March quarter 2012 was 41,109, 20.5 per cent lower than the same time last year. Over the same period, the capacity of Victoria's accredited feedlot industry increased from 93,724 to 107,645. Capacity utilisation, however, decreased from 55 percent in March 2011 to 38 percent in March 2012. The total number of cattle being turned off from these feedlots has progressively increased over the past three years with total turnoff for the year ending December 2011 being approximately 220,0826.
There are 24 licensed abattoirs supervised by PrimeSafe with a further 17 licensed abattoirs supervised by the Australian Quarantine and Inspection Service in Victoria. Five are located in metropolitan Melbourne, while the rest are spread across rural and regional centres including Cobram, Warrnambool, Bairnsdale and Colac.
Victoria's Beef and Veal Production
Victoria's beef cattle industry generally supplies smaller, younger animals for the domestic market and higher quality stock for the Japanese market. The volume and value of beef and veal produced in Victoria is largely affected by seasonal conditions, domestic and foreign demand and input prices. These factors influence farmers' decisions on beef cattle stocking rates relative to sheep and lamb stocking rates and saleyard throughput – thus influencing the numbers of adult cattle and calves slaughtered and the amount of beef and veal produced.
Since December 2008, the number of cattle and calves slaughtered has dropped by about 598,000 (28 per cent), with the number slaughtered falling from 2.13 million in 2008 to 1.54 million head for the year ending December 20117. This partly reflects better seasonal conditions and improved prospects for the beef cattle and dairy industries into 2011-12, which increased the focus on herd rebuilding.
Between December 2008 and December 2011, beef and veal meat production for Victoria declined by 70,714 tonnes or 17.4 per cent .
With grain finishing becoming a more common tool for improving feed efficiency and productivity across the Australian supply chain, the number of Victorian cattle in feedlots has increased. According to Meat and Livestock Australia the grain fed percentage of total slaughterings in Victoria is expected to increase to 31 per cent by 20218.
Average animal slaughter weights have increased over time, rising by 21.8 per cent since 1995. The average carcass weight of a slaughtered animal in Victoria for the year ending December 2011 was 265.4 kg an increase of 1.7 per cent on the end of December 20119.
Figure 2 – Beef Cattle Numbers (Victoria) – years ending 30 June
Source: ABS, Historical Agriculture Commodities 1861-2009, (cat. no. 7124.0); ABS, Agricultural Commodities, Australia (cat. no. 7121.0) and ABS, Principal Agricultural Commodities, Australia, Preliminary, 2010-11 (cat no 7111.8).
Domestic Demand and Exports of Victoria's Beef Products
The domestic market for beef is driven by consumer preferences, competition with other protein sources (e.g. poultry meat) and price. Despite competition from cheaper meats, beef consumption has remained relatively steady since the mid 1980's, with per capita consumption in the range of 32-40 kg per year. In 2010-11, beef and veal consumption comprised around one third of meat consumed in Australia with approximately 33 kg per capita being consumed out of a total of 104.8 kilograms of meat consumed.
In the year ended June 2011, only 62.3 per cent of Victorian beef and veal produced was exported10. From 2010 to 2011 the value and volume of fresh, chilled or frozen beef and veal exports from Victoria increased by 10 per cent and 0.8 per cent respectively. Victorian beef exports increased from 149,500 tonnes in 2010 to 150,700 tonnes in 2011, while .the value of exports rose to $615 million from $559 million the previous year.
Victoria's major export markets for beef are Japan, the Republic of Korea and the United States of America. In 2010-11, exports of manufacturing beef, previously destined for the US, have increasingly gone to other markets such as Russia the Philippines and Indonesia due to higher prices and stronger demand.
Figure 3 – Victorian Beef and Veal Exports
Source: ABS International Merchandise Export Statistics (Unpublished).
The Eastern Young Cattle Indicator (EYCI) is the main indicator of beef cattle prices in Victoria and other eastern states. Historically, movements in the EYCI closely reflect movements in many young cattle prices, which in turn are influenced by seasonal conditions, fluctuations in slaughter rates, export demand and exchange rates.
Figure 4 – Average EYCI prices
Source: MLA – Market Statistics Database, 2012
During the last six months of 2011, the south eastern Australian cattle markets defied previous trends, pushing the EYCI to a record high of 428 c/kg before Christmas. Feed and water availability heading into summer were much better than previous years resulting in increased demand and prices for young cattle from restockers.
Over the last 6 months however, the EYCI has declined from its record high of 428 c/kg in December 2011 to 366 c/kg in mid May 2012. Although the EYCI has fallen by more than 14.7 per cent since its peak in December 2012, it continues to remain at historically high levels.
The combined effects of a softening in the young cattle and restocker market as well as the compounding effects of dry weather and cooler temperatures over south eastern Australia during the first half of the year has motivated producers to sell cattle in big numbers before the winter break – thus putting downward pressure on the EYCI.
Beef cattle saleyard prices are being driven largely by demand for premium table beef in North Asia and the value of the Australian dollar11.
Total Factor Productivity
Growth in total factor productivity of Victorian beef farmers has been driven by improved breed genetics, pastures, farming systems and scale economies. Total factor productivity growth in the Victorian beef cattle industry averaged 0.8 per cent per annum between 1977-78 and 2008-09. The national average for the beef cattle industry for the same time period was 1.5 per cent per annum12.
Victoria's smaller beef cattle producers are likely to require larger productivity growth to sustain profits and export competitiveness as they face increased international competition, economic volatility, declining terms of trade and climate variability. Nevertheless, Victorian beef cattle producers appear well equipped to improve productivity growth13.
Employment on Victoria's beef cattle farms
In 2006, the number of Victorians employed on beef cattle, sheep/beef cattle, sheep/cropping and beef/cropping farms was approximately 11,590. Of those 8,342, were employed in the beef cattle industry14.
The Victorian meat processing industry employs around 9,200 people, of which 4,700 were employed in abattoirs and meat packing facilities, with 1,400 working in metropolitan Melbourne15.
Financial Performance of the Victorian Beef Cattle IndustryTable 1 includes financial performance and profitability indicators of a sample of beef cattle farms collected from the Livestock Farm Monitor Project (LFMP) and highlights the differences between top performers and other farms across Victoria in 2010-11. Whole farm returns are displayed as the return on assets and return on equity, however these figures are from the entire LFMP sample which includes mixed and sheep only farms.
In 2010-11, farm profitability and productivity was higher for the top 20 per cent of beef cattle enterprises across all of the surveyed regions. The top 20 per cent of farms surveyed tended to receive higher rainfall, farm with higher stocking rates, receive higher prices for cattle sold, and enjoy lower costs of production on a kilogram of product produced basis.
As an indicator of general financial performance, beef cattle gross margins are a useful tool in terms of farm management. In 2010-11, the top 20 per cent of beef cattle properties surveyed enjoyed gross margins per hectare of around 2 to 3 times the average gross margin. In each region the top 20 per cent of beef cattle operators had stocking rates well above the average.
Table 1 – Beef cattle farm financial performance and profitability indicators 2009-1016
|Gippsland||North East||South West|
|Average||Top 20%||Average||Top 20%||Average||Top 20%|
|Average sale price received||$/kg/LWT||1.86
|Cost of Production||$/kg/LWT||1.43
|Total Enterprise costs||$/HA||203
|Profit Excl. Int/Lease||$/Kg LWT||0.26
|Return on assets
|Return on equity
Government policy/regulation influences
Beef cattle farms and beef cattle feedlots have legal responsibilities and are required to comply with a range of policies relating to food safety, animal welfare, biosecurity and the environment – for example, the various codes governing the accepted farming practices for the welfare of cattle, the welfare of animals during transportation and the Prevention of Cruelty to Animals Act 1986.
New beef cattle feedlots or substantial modifications to existing feedlots should comply with the Victorian Code for Cattle Feedlots.
On 1 August 2011, the Department of Primary Industries launched 'DPI's services to beef and sheep producers'. This document outlines DPI's operating context and describes the 9 key specific services it provides to beef and sheep producers.
Victorian farmers can also take advantage of the BetterBeef Network run by the DPI and private service providers who deliver accredited training, field days, and provide opportunities for beef producers to access the latest beef research messages and participate in courses that increase skills and knowledge. The focus of the network is on increasing the profitability and sustainability of beef enterprises.
More recently, the Victorian Government announced a $3.45 million investment in Research and Development to establish a new Red Meat Innovation Centre at Hamilton which would help support the red meat sector to increase productivity and profitability in coming years.
Figure 5: Beef industry supply chain
1 ABS, Value of Principal Agricultural Commodities Produced, Australia, Preliminary, 2010-11 (Cat. No. 7501.0)
2ABS, Principal Agricultural Commodities, Australia, Preliminary, 2010-11 (Cat. No. 7111.0)
3MLA Statistical Review June 2010 – June 2011.
4Livestock Farm Monitor Project, Results 2010/11, Department of Primary Industries 2011.
5Phone conversations with Dougal Gordan Australian Lot Feeders Association, Victorian Feed Lot Committee and Greg Ferrier (DPI Vic).
6Australian Lot Feeders Association, ALFA/MLA Feedlot Survey & ALFA Media Release 10th May 2012.
7ABS, Livestock and Meat, Australia, May 2012 (Cat. No. 7218.0.55.001) – Number is for trend estimate.
8ABS, Livestock and Meat, Australia, May 2012 (Cat. No. 7218.0.55.001) – Number is for trend estimate.
9MLA Statistical Review (Various issues) and ABS, Livestock and Meat, Australia, May 2012 (Cat. No. 7218.0.55.001) – Number is for trend estimate.
10Percentage of beef and veal exported is expressed in carcass weight. To convert shipped weight of beef and veal to carcass weight, multiply the weight of the exported boneless meat by 1.5 for beef and veal and adding it to the weight of the exported bone-in meat.
11Roberts, I, Haseltine, I & Maliyasena, A 2009, Factors Affecting Australia's Agricultural Exports, ABARE Issues Paper 09.5, Canberra.
12ABARE, Unpublished Total Factor Productivity data for the years 1977-78 to 2008-09.
13Nossal, k, Sheng, Y and Zhao, S 2008, Productivity in the beef cattle and slaughter lamb industries, ABARE Research Report 08.13, Canberra.
14ABS Census Data, (Cat. no. 2604.0 – CDATA Online).
15Discussion with Graham Bird, State Sec of Australasian Meat Industry Employees Union (AMIEU).
16Financial performance and profitability data relating solely to beef cattle farms is not available as it is embedded in the LFMP data sets which include wool, prime lamb and beef cattle enterprises. Apart from the return on assets and return on equity indicators – all other indicators relate to the beef cattle part of the enterprise.