Everybody is very quick to claim the credit for the price increase including the Minister and the MLA; however such a rapid rise in price can make for problems of their own.
How long ago was it that people were talking about milk as being white gold? Try June last year. The fact is commodity prices can come up very quickly but also go down with equal speed. I can only hope this doesn’t happen in the beef industry but if it does who will take the responsibility?
Processors are suffering badly and bleeding money. Whilst I have not got a great deal of sympathy for the processors, I have always believed that you reap what you sow and processors certainly didn’t show any mercy for producers suffering from drought and interruption in live shipping . The fact is that they knew producers were suffering and going broke and showed no mercy.
Multinational processors can borrow up to the hilt from their overseas headquarters. This means that they may not make a profit in Australia and may not pay tax here but they can also cushion losses by profits from overseas enterprises.
Local processors probably can’t have profit transfers like the multinationals and may not have the capacity to cushion losses in the same way. Could it be possible that if local processors go under then we will see more control by multinationals? I for one would consider that it is very likely and the last thing we need in Australia is more contraction on the processing front.
It is interesting to note that in the early 90’s about 80% of our processing was locally owned. Now we are down to only 40% of our processing being owned by Australian interests.
Producers who almost gave their cattle away during the drought are now forced to pay record prices in order to restock, and I for one feel this is having an impact on the present record prices. The MLA’s Eastern standard indicator suggests that the price of beef is up to $6.50 a kilogram. However I’d never seen processors pay these prices.
Shopping at the local supermarkets is rather interesting.
Loin pork chops $14 a kilogram, legs of lamb $10 a kilogram, loin chops $16 a kilogram, full chicken $4 a kilogram, drumsticks $2.50 kilogram. And then we get onto beef mince $14 a kilogram, Scotch fillet $40 a kilogram. The simple fact is that beef is the dearest meat protein and the most inconsistent.
A pork chop is never taken out of a cast for age breeding animal and this applies to lamb as well as chicken.
Consumption of beef: MLA says “they have stabilised the consumption of beef through their advertising”. It seems to me that a lot of people may disagree with this. I will be very interested to look at the next ABARE figures as projections for beef consumption continues to slide.
To me most people are motivated by two very important factors when buying meat: price and consistency. To my way of thinking beef fails on both fronts.
When MLA did their business plan for MSA and a detailed analysis on every kilogram of beef that was not bought by Australian consumers, what was the cost?
Australian domestic consumption of beef is valued in excess of $8 billion. Since MSA in the late 90’s the consumption of beef has gone back from 40kg down to less than 28kg. This suggests that we have lost nearly a third of the protein meat market. The fact is chicken and pork are killing beef. My calculations suggest this loss is worth in excess of $3B/ yr in lost share.
Surely the time has come to realise that if each part of the beef chain is not treated with respect the whole industry may suffer as a chain is only as strong as its’ weakest link.
The whole beef industry is worth $18 billion to the Australian economy and employs 200,000 people.
Surely the time has come as an industry we should be looking at stopping the dog eat dog attitude because the whole industry relies on producers. Without them there we have no beef industry.