View archived beef cattle industry profiles at the Industry Profile Archive

Key points

• 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.
• Beef cattle numbers in Victoria have fallen from 2.78 million in the early 1980's to 2.41 million in 2011.
• Domestic consumption of beef during 2010-11 was approximately 33 kilograms per capita, having declined from 34.6 kilograms in 2009-10¹.
• 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.

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 32,663 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 750 hectares.

While most of Victoria's cattle are kept on managed pastures, around 10 to 12 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 around 25 feedlots accredited under the National Feedlot Accreditation Scheme – (operators must be accredited to export beef) – and around 250 small unaccredited feedlots in Victoria⁴.

The number of cattle on feed during the September quarter 2011 was 14.4 per cent lower than in September 2010 at 45,625. Over the  same period the capacity of Victoria's accredited feedlot industry increased from 82,313 to 103,104. The total number of cattle being turnoff from these feedlots has progressively increased over the past year with total turnoff for the year ending September 2011 being approximately 209,305⁵.

There are around 25 licensed abattoirs supervised by PrimeSafe with a further 18 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, Wodonga 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 2008, the number of cattle slaughtered has dropped by about 430,000 (20.8 per cent), with the number slaughtered falling from 2.06 million in 2008 to 1.63 million head for the year ending June 2011⁶. 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 2010, beef and veal meat production for Victoria declined by 34,122 tonnes or 8.4 per cent⁷.

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 18 per cent since 1995. The average carcass weight of a slaughtered animal in Victoria for the year ending June 2011 was 265.7 kg an increase of 4.3 per cent on the end of June 2010⁹.

 

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).

Prices

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, 2011

Over the year to mid December 2011, the EYCI increased from 399.5 c/kg in January to 413 c/kg and averaged 395.9 c/kg over the year.

During the last six months of 2011, the south eastern Australian cattle markets defied previous trends, pushing the EYCI to six year highs. Feed and water availability heading into summer continue to be much better than previous years resulting in increased demand and prices for young cattle from restockers.

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 Industry

Table 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 2009-10.

In 2009-10, 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 2009-10, 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%
Stocking rate	DSE/HA	14.1	21.4	10.4	12.6	15.7	19.9
Average sale price received	$/kg/LWT	1.53	1.73	1.53	1.72	1.55	1.9
Cost of Production	$/kg/LWT	1.44	0.8	1.13	0.7	0.82	0.69
Total Enterprise costs	$/HA	178	266	142	282	260	457
Profit Excl. Int/Lease	$/Kg LWT	0.07	0.44	0.25	1.04	0.3	0.8
Gross Margin	$/Ha	249	491	350	952	243	619

Source: Department of Primary Industries: Livestock Farm Monitor Project (LFMP) Results 2009/10

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 10 key services it provides to beef and sheep producers.

 

Figure 5: Beef industry supply chain
 

Notes:

¹ MLA Statistical Review June 2010 – June 2011.
² Australian Bureau of Statistics: Based on 2006 Mesh Block Boundaries. Number of beef cattle sourced from the 2006 Agricultural Census. This map was produced using coordinate system: Lat/Long GDA94, @Commonwealth of Australia, 2010.
³ ABS Year Book of Australia (numerous), (cat. no. 1301.0).
⁴ Phone conversations with Dougal Gordan Australian Lot Feeders Association, Victorian Feed Lot Committee and Greg Ferrier (DPI Vic).
⁵ Australian Lot Feeders Association, ALFA/MLA Feedlot Survey & ALFA Media Release 14^th February 2011.
⁶ ABS, Livestock and Meat, Australia, February 2011 (Cat. No. 7218.0.55.001) – Number is for trend estimate.
⁷ ABS, Livestock and Meat, Australia, June 2010 (Cat. No. 7218.0.55.001) – Number is for trend estimate.
⁸ MLA, 2020 Vision of the Australian Feedlot Industry, FLOT.132, November 2009.
⁹ MLA Statistical Review (Various issues).
¹⁰ Percentage 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.
¹¹ Roberts, I, Haseltine, I & Maliyasena, A 2009, Factors Affecting Australia's Agricultural Exports, ABARE Issues Paper 09.5, Canberra.
¹² ABARE, Unpublished Total Factor Productivity data for the years 1977-78 to 2006-07.
¹³ Nossal, k, Sheng, Y and Zhao, S 2008, Productivity in the beef cattle and slaughter lamb industries, ABARE Research Report 08.13, Canberra.
¹⁴ ABS Census Data, (Cat. no. 2604.0 – CDATA Online).
¹⁵ Discussion with Graham Bird, State Sec of AMIEU.
¹⁶ Financial 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.