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Beef Pricing

I was interested to read in Beef Central comments by Steve Kay when he commented on the circumstances faced by US processors, the comment makes compelling reading.

From my point of view processors in Australia have had a dream run for many years especially when live shipping fiasco occurred along with drought.  To me this dream run could be about to come to a halt, with prices in Australia starting to take off.

The fact is processors and retailers have really squeezed Australian producers in numerous ways.

In Australia as a producer we have to jump through all sorts of hurdles to ensure that our beef is cleaner more traceable than any other country in the developed world. Until recently the South Americans have been getting better prices for their stock than in Aust., in the US almost double, whilst their consumers’ pay 20% less for retail meat than Australians, this is despite all the bells and whistles our producers are obliged to commit to.

This is only part of the story and we find processors developing rules, which are ably abetted by AusMeat and MLA. Some of the excuses used to penalise producers are simply ridiculous and animal cut in half one side measures half a kilogram more or less on one side allowing substantial penalties imposed. MSA an animal can be assessed and pass through as an MSA beast and then we find that the carcass doesn’t meet company specifications. Does this mean that the meat of that animal is then sold at a discount product? Of course not, it is simply sold as an MSA product bringing a premium price for what has been a discounted product.

The simple fact is that most things in life, what goes around comes around and I’m sure that the processors may find that things will tighten up and producers will get a better share of the dollar.

How long ago was it that a publication suggested that $3.40 the processor was making five cents a kilogram net? Upon reading this article I have kept a copy and it seems on November of last year producers were indeed getting $3.40 a kilogram dwt and since then the price in Japan for full sets has inched higher whilst at the same time the price of 90cl trim has decreased marginally whilst the value of dollar has not had any large changes.

All things being equal at $4.70 the processor quoted at five cents a kilogram should he be losing a $1.25/kg I think not and processors still have money up their sleeve if forced by supply and demand to pay more.

Supermarkets are also quick to tell producers how tight their margins are and are quick to tell everybody facts that may not stack up to any scrutiny.

Australia the MLA are quick to tell everybody what a great job they have done when the price of retail beef takes inevitable increases which have in the past not flowed back to the producer. Richard Norton from MLA suggests we should market Aust. beef like a Ferrari car; it seems we have the Ferrari.  However until recently producers have been getting Morris Minor prices for a Ferrari product.  

While all this happens the chicken industry is going from strength to strength and killing beef with prices that are simply too good to miss for cash-strapped families. It does not stop there as chicken is always consistent, it may be bland and tasteless but it always is tender.  The fact is you never see a clapped out laying fowl masquerading as a prime chicken. In the case of beef the price continues to skyrocket. An interesting comparison is a full rump that may be wholesale at eight dollars a kilogram can retail at $20 a kilogram, chicken wholesale price, I have no idea but at five dollars a kilogram the supermarket could not be adding the margins that they add to beef.

It will be very interesting to see the findings of the coming Senate enquiry, hopefully some of the sugar coating that other enquires have been fed will be peeled back and people will get a  true indicator of what the truth really is.  One can only hope!

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