Slowing meat production signals good price news for beef and sheep

Australia’s sheepmeat and beef producers are set to enjoy strong prices into 2019, supported by a growing global appetite for meat amid limited supply availability, Rabobank’s Global Animal Protein Outlook 2019 indicates.

However, the productive capacity of Australia’s beef herd and sheep flock will be limited by the heavy culling of female cattle and sheep seen in 2018, with any upside dependent on improved seasonal conditions in the year ahead.

Rabobank’s annual outlook for the animal proteins sector, titled Growth Slows Down, As Doubt Gears Up, forecasts a slowing in the pace of growth for meat production in most regions throughout the world next year.

Uncertainty is created by trade tensions, high feed prices and African swine fever contributing to the decline.

READ: More Queensland beef to be exported to Japan and South Korea

Global animal protein production, primarily beef, pork and poultry, is expected to expand by more than one million tonnes in 2019 – well below the five-year average growth rate – to some 500 million tonnes.

Production growth will slow across nearly all key regions, with China predicted to see a substantial production decline, driven by the impacts of African swine fever on its pork sector, the report said.

Brazil’s livestock production, however, is forecast to continue its strong growth trajectory, while the production outlook for North America is also relatively strong,

For Australia – where sheepmeat and beef production will decline, alongside New Zealand – the overall restrained global animal production outlook will provide some upside on the price front.

Good global prices will continue to support Australian prices for finished lambs and cattle in 2019, the report explains.

Rabobank senior animal proteins analyst Angus Gidley-Baird said strong global demand for sheepmeat and limited supply availability will support strong prices through 2019, with New Zealand – the world’s other major supplier of sheepmeat – set to have its lowest lamb kill on record in 2019.

“While further upside beyond record 2018 sheepmeat prices will be limited, prices will remain firm, given strong demand in key global markets such as the Middle East, China and the US,” he said.

Lamb production in Australia will remain restricted in 2019, impacted by higher sheep sales seen in 2018 due to dry weather conditions, said Gidley-Baird.

For Australia’s beef sector, the cattle inventory will remain very low following heavy de-stocking seen between 2013 and 2016, and then again in 2018, due to dry conditions that limited the availability of feed.

Cattle numbers will remain steady at the current low numbers until conditions improve, said Gidley-Baird.

“While limited supplies support cattle prices for producers, supply-chain efficiencies will be tested, with lower volumes available for feedlots and processing,” he said.

“Without substantial rain, 2019 will test many producers, given already-limited and expensive fodder supplies.”

Rabobank expects Australian beef production volumes to fall with lower slaughter numbers and, consequently, export volumes to decline slightly in 2019.

Consultation open for new rules for exporting meat products

​People in the meat trade are being urged to have their say about new rules ​for exporting meat products.

The call comes from the Australian government after consultation on new draft export control rules for meat and meat products were opened on November 7.

The minister for agriculture David Littleproud said the export control rules will bring in modern, flexible and streamlined export laws for meat producers.

“I want to keep the doors open for Aussie meat exporters and this will give overseas markets greater confidence in our products,” said Littleproud.

READ: Lamb skins exports reach $377 million last year with price increasing

“Our industry needs to be responsive to changing overseas market conditions without slugging our farmers.

“These rules will make exporting meat straightforward and cut duplication of paperwork and processes,” he said.

“They’ll clearly outline how meat should be prepared and if permits or certificates are required while maintaining the level of oversight expected by overseas markets.

“This will support access to export markets making sure our reputation for reliable, high-quality meat is upheld,” said Littleproud.

Existing export-related legislation is being streamlined and consolidated into improved legislation in the Export Control Bill 2017 and export control rules.

The Draft Export Control Rules 2020 – for meat and meat products are ready for consultation.

Stakeholders need to make written submissions by December 21, 2018.

Information sessions will be held during November and December. Other opportunities to comment will be available before the full package comes into effect.

More than $11.5 billion of Australian meat was exported in 2017-18.

It is expected that $12.2b will be exported in 2018-19.

The rules will replace the export control orders and parts of the Australian Meat and Live-stock Industry Act and the Australian Meat and Livestock industry regulations.

Meat Standards Australia delivers more than $152m in farm gate returns

The Meat Standards Australia (MSA) program is estimated to have delivered $152 million in additional farm gate returns in 2017-18, according to the latest data contained in the MSA annual outcomes report.

The new data also shows more than 3.1 million cattle and 6.1m sheep processed through the MSA program in 2017-18.

For cattle, this represented 43 per cent of the national adult cattle slaughter, an increase of 3 per cent on the 2016-17 financial year.

The number of sheep following MSA pathways in 2017-18, represented 26 per cent of the national lamb slaughter.

READ: Sheep and goat traceability requirements increased

Seventy-four per cent of those lambs supplyed brands underpinned by MSA.

MSA program manager Sarah Strachan said latest figures showed the MSA program continued to grow and strengthen, providing strong farm gate returns.

“This year marks 20 years since this world-leading eating quality program was released to industry, and adoption rates continue to rise with more than 5,000 new cattle and/or sheep producers becoming registered to supply livestock through the MSA program in the past financial year,” she said.

“Producers continue to also embrace carcase feedback, with a 32 per cent increase in the number of beef producers accessing reports and benchmarking tools on myMSA in 2017-18.

“The uptake in accessing carcase feedback is reflected in outstanding compliance to MSA minimum requirements, which was maintained at 94 per cent across all feed types, nationally, and the average MSA Index for compliant carcases improved by 0.19 Index points to 57.78,” said Strachan.

Sixteen new brands became MSA-licensed to underpin their brands with the independent endorsement of eating quality, taking the total number of MSA-licensed brands to 172.

Almost 3,000 producers received MSA education through more than 81 workshops or information sessions, including the MSA Excellence in Eating Quality Awards series, which reached more than 500 producers at six forums across the country.

Strachan said looking towards 2020, MSA had its sights set firmly on ensuring all cattle in Australia will be eligible for MSA grading and have their eating quality accurately described.

“The goal is for more than 50 per cent of the national cattle slaughter and 43 per cent of the lamb slaughter being MSA graded,” she said.

“At the same time we are looking for ways to help producers improve their compliance rates, their MSA index values and supporting brand owners to fully embrace eating quality principles.

“These goals are driving the focus for investments in new eating quality research and striving to extract greater value from the MSA program for the whole supply chain,” said Strachan.

MSA is focused on ensuring the program continues to grow and deliver benefits to its more than 50,000 registered producers, 53 MSA processors, 172 brands, and 3,681 end user outlets, by consistently meeting consumers’ expectation for beef and sheepmeat eating quality, she said.

State breakdown (MSA proportion of state slaughter):

–          New South Wales represented 62 per cent of MSA cattle and 17 per cent of MSA sheep

–          Queensland represented 39 per cent of MSA cattle

–          South Australia represented 20 per cent of MSA cattle and 55 per cent of MSA sheep

–          Tasmania represented 58 per cent of MSA cattle and 14 per cent of MSA sheep

–          Victoria represented 20 per cent of MSA cattle and 33 per cent of MSA sheep.

–          Western Australia represented 56 per cent of MSA cattle and 33 per cent of sheep.

 

Cattle prices trend down as drought conditions increase pressure in market

Cattle prices have generally trended down during 2018, but some states have been more stable than others, Meat and Livestock Australia has reported.

In the eastern states, young cattle have struggled to find consistent support in the market as the poor season has unfolded, with the Eastern Young Cattle Indicator (EYCI) on a downward trajectory for the most part of 2018.

EYCI category cattle in Queensland have seen the biggest decrease for the year, down 99¢/kg carcase weight (cwt) from the beginning of 2018 to the 16th of September.

NSW has declined 61¢/kg cwt and prices in Victoria have remained relatively stable easing 10¢/kg cwt.

READ: Sheep and cattle slaughter increases to reduce stock numbers during drought

WA has benefited from a more typical season, especially in the south with prices down only 8¢/kg cwt for the year.

Young cattle in the west are now trading at a considerable premium through the yards, with a 52¢/kg cwt premium over NSW and 57¢/kg cwt above Victorian prices.

The figures below are for the year-to-date – to the 16th September.
NSW – down 61¢ to 504¢/kg cwt
Queensland – down 99¢ to 482¢/kg cwt
Victoria – down 10¢ to 499¢/kg cwt
WA – down 8¢ to 556¢/kg cwt

Similar to young cattle, cow prices have been under pressure through most of 2018.

Poor conditions coming in to winter and minimal rain during that time contributed to low restocker competition and consequently, lower prices.

However, over the last month, the medium cow indicator has started to see a bit of a resurgence as spring brings some optimism.

NSW and Queensland have seen the best of the increases recently – the NSW medium cow indicator rose 79¢ from the start of August to average 441¢.

Queensland increased 81¢ to 460¢/kg cwt. Victoria has also increased, although not to the same extent, up 47¢/kg cwt.

The cow price differential for 2018 is WA, where the indicator remained most stable and recorded a slight upwards trend throughout the year.

This is partly due to its low starting point, a 40¢ discount to the eastern states, at 364¢/kg cwt in January.

The medium cow indicator for WA was 432¢, only 9¢ below NSW prices and a 24¢/kg cwt premium over Victoria.

The figures below are for the year-to-date – to the 18th September.
NSW – up 20¢ to 441¢/kg cwt
QLD – up 34¢ to 460¢/kg cwt
Victoria – up 2¢ to 408¢/kg cwt
WA – up 68¢ to 432¢/kg cwt

Lamb wins big at Sydney Royal Taste of Excellence Awards despite drought

Lamb entries have defied Australian drought conditions to be named the winner of the 2018 Dick Stone perpetual trophy at the Sydney Royal Taste of Excellence Awards.

The trophy was won by Victoria’s Woodward Foods Australia for its export grade Lamb (USA).

The awards night was held at the Sydney Showground on the 21st of September.

The Dick Stone perpetual trophy is decided amongst the championship winners to emerge from the Branded Meat section of the coveted Sydney Royal Spring Fine Food Show held in September.

READ: Report shows Australia is the world leading exporter of lamb

This is the first year the trophy has been expanded to include beef, lamb and pork classes presented to the expert judges.

Chair of the Sydney Royal Spring Fine Food committee and Royal Agricultural Society of NSW councillor, Lachlan Bowtell, said this year’s competition was a testament to resilience.

“Even through the ravages of drought Australian lamb producers have delivered yet again,” said Bowtell.

“The high quality and flavours of the lamb presented to the judges this year made their role even more difficult.

“The Sydney Royal Fine Food Awards aim to reward excellence and this year was a true testament to the commitment and passion of not only lamb, but beef and pork producers, at times under dire circumstances,” he said.

Chair of judges in the Branded Meat competition George Ujvary said the overall quality of beef exhibits this year was very high and it was interesting to see the gap between the marbling quality of grass fed and grain fed beef exhibits closing yet again this year,” said Ujvary.

“The marbling of Wagyu exhibits this year was exceptional and flavour across all categories was very good.

“In the lamb competition, the standard of some exhibits was exceptionally high this year despite the conditions seen across the country which presented a number of challenges to producers,” he said.

“The top exhibits were sweet in flavour, extremely tender and exceptional in mouthfeel and appearance.

“Whilst the pork competition is still in relative infancy, the standard of competition was high and we all look forward to seeing this competition develop in the coming years,” said Ujvary.

During the competition 11 gold medals were awarded across seven classes in Branded Meat.

 

Red Meat Advisory Council reviews whether industry standards are fit for future

The Red Meat Advisory Council is undertaking an independent review of the rules of engagement in the red meat industry.

The review will look at the industry’s Memorandum of Understanding (MOU), and examine whether it properly represents all sectors of the industry and is fit for the future.

Jim Varghese will lead the review. He has a 30 year track record of delivering results, as both a CEO and as head of government agencies in Queensland and Victoria.

Minister for Agriculture, David Littleproud, said the red meat industry is big business and the industry needs to make sure it’s ready for new opportunities and challenges.

READ: Report shows Australia is the world leading exporter of lamb

“The MOU put in place 20 years ago carves out the funding and service delivery arrangements between peak councils, RDCs and the Commonwealth.

“What was put in place two decades ago might not be fit for today,” he said.

“The review is also in line with the recommendations of the senate inquiry into the effect of market consolidation on the red meat processing sector.

“It is an important opportunity to set the direction of the sector,” said Littleproud.

The beef cattle industry, including slaughter and live exports, is the largest contributor to Australian agriculture, with gross production at $13 billion.

Report shows Australia is the world leading exporter of lamb

Australia has been labelled the leading exporter of lamb worldwide, in a 2018 State of the Industry report.

Independent chair of the Red Meat Advisory Council, Don Mackay, said the report highlights the key economic and community role the Australian red meat and livestock industry plays for the nation – and the potential for it to make an even bigger contribution.

In 2017,  Australia was the lead exporter of sheepmeat in the world, despite representing only six per cent of the global sheep flock. 

The country was also the third largest exporter of beef in 2017, behind Brazil and India, and the world’s leading exporter of goatmeat in 2016.

READ: Lamb skins exports reach $377 million last year with price increasing

Mackay said beyond exports, red meat continues to be a key part of how Australians live their life with Australians being one of the largest red meat consumers per person in the world.

“Our industry continues to be a major employer, employing 438,100 Australians directly and indirectly, supporting 82,500 businesses and generating $65 billion in turnover.

“Ninety per cent of these jobs are regionally and rurally based and our combined workforce accounts for four per cent of total industry employment in this country,” said MacKay.

“Aussies still love red meat – what we don’t export, we eat. Australians are eating three times as much beef and five times the global average of sheepmeat,” he said. 

State of the Industry 2018 was developed by the Australian red meat and livestock industry’s service provider Meat and Livestock Australia (MLA) and builds on the inaugural report commissioned by MLA for the red meat industry in 2017.

It benchmarks where Australia sits in terms of red meat consumption, production, imports and exports, as well as the economic significance of the industry in a world where global red meat demand is projected to grow between 1 – 2 per cent.

“The Australian red meat and livestock industry generated more than $13 billon for the nation last year and has the potential to grow its contribution through investment in our people, our land and opening up markets,” said MacKay.

“Australian red meat is currently exported and enjoyed in more than 100 countries around the world. As an industry, we will ensure we continue develop and prosper for the benefit of all Australians,” he said. 

Australia’s sheepmeat exports to China saw the largest ever start to the year

Strong demand from China, coupled with tight supplies in New Zealand, have been key contributors to the record Australian trade lamb prices in recent weeks.

China is the world’s largest sheepmeat producer, consumer and importer.

The country has been Australia’s single largest sheepmeat export destination by volume for the past couple of years and is second, to the US, by value.

Meat Livestock Australia reports that Australia’s sheepmeat exports to China have seen the largest ever start to the year, swelling 43 per cent year-on-year to an all-time record of almost 55,000 tonnes for the January-July period.

READ: Sheep and cattle slaughter increases to reduce stock numbers during drought

China has a two-track production structure, with a mix of large-scale farms and industrialised processing companies, and small herders with a couple of animals processing batches through local slaughterhouses.

Small herders still represent a significant proportion of producers in China and they principally add volatility to the market, by growing flocks to take advantage of high prices and exiting when prices fall or livestock-rearing conditions deteriorate.

This means that over-production is an ever-present risk and, given domestic production accounts for 95 per cent of consumption, it can have an immediate negative impact on import demand, particularly at the commodity end of the market.

China produces one-third of the world’s sheepmeat, and high prices, growing demand and government support are forecast to underpin growth over the next decade.

Between 2017 and 2027, China’s sheep flocks are forecast to increase 1.1 per cent on a compound annual growth rate and for production to lift 2.1 per cent, according to GIRA.

At the same time, high prices, drought and disease are affecting China’s domestic production, and can potentially result in short-term production surges.

Much of northern China, where the majority of China’s sheep and goat flocks are raised, has been in intermittent drought for some years, with surface and groundwater at record lows in some places.

While production is forecast to increase in coming years, so is consumption.

GIRA is currently anticipating a compound annual growth rate increase in consumption of 2 per cent from 2017 to 2027.

Current estimates suggest that China’s sheepmeat production will continue to fall short of meeting consumption out to 2027.

China’s growing demand for a variety of premium proteins, including lamb, will be driven by significant growth in the number of wealthy urban households with high discretionary incomes.

Consumers are upgrading purchases across many product categories, including meat, which means eating larger quantities and of a wider variety.

Affluent consumers are seeking higher quality, imported chilled meat products, for consumption at home and through foodservic

While China’s 2017 estimated annual per capita sheepmeat consumption is relatively low – 3.4 kg per person in China compared to 8.4 kg in Australia – this is forecast to increase to 4.0 kg by 2027, which is significant for a consumer base of around 1.4 billion, according to GIRA.

Meat and Livestock Australia launches online platform about Australian meat production

Meat and Livestock Australia (MLA) has launched a new online platform that provides consumers with an open and trusted source of information about the production of beef, sheep and goat meat in Australia.

The platform, Good Meat, demonstrates how Australian red meat is produced sustainably, in high welfare systems and is an important part of a healthy balanced diet.

Good Meat is also home to a range of educational resources including study guides, classroom posters, lesson and activity sheets, virtual farm visits, digital lessons and online board games.

MLA managing director Richard Norton said while the vast majority of consumers in metropolitan centres across Australia were confident in the practices of the red meat industry, Good Meat spoke directly to those who sought more information about production systems.

READ: Growing trade and investment at Beef Australia 2018

“The consumer is king in our industry and we understand that community trust is integral to a sustainable and prosperous industry,” said Norton.

“Good Meat provides an engaging platform for red meat producers to share their story and demonstrate their commitment to best practice and continual improvement. It emphasises the high standards already in practice while reinforcing the industry’s on-going commitment to animal welfare and responsible environment management,” he said.

Recent research for MLA shows that about 1 in 5 meat eaters have a good understanding of the Australian beef and lamb industry and there are now almost 20 per cent fewer Australians from urban centres visiting cattle or sheep farms annually compared to eight years ago.

However, the same research reveals consumers’ appetite to learn more about food production, with more than 50 per cent interested in how Australian farmers produce beef and lamb.

“Good Meat is built on MLA’s consumer insights and data. It is a direct response to the increasing interest consumers have in the provenance of their food and how it is produced,” said Norton.

“Good Meat will also prove an important tool for those producers looking for resources to help share their story, promote what they do, build consumer confidence and challenge misconceptions,” he said.

Good Meat has been developed in consultation with the red meat industry.

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