Australian beef over worst of Asian crisis

By Boyd Champness

THE future is finally looking bright for Australian beef farmers.

After enduring some of the toughest conditions ever faced by the industry over the past four years, beef is slowly emerging from the doldrums.

Domestic meat consumption is expected to increase this year, exports are tipped to grow and saleyard prices are predicted to rise, according to official forecasts.

Cattle Council of Australia executive director Justin Toohey said economic improvements in Asia coupled with a downturn in beef production in the United States would benefit Australian exporters.

Speaking to the Melbourne-based newspaper The Age, Mr Toohey said: “The outlook is positive.

Live exports are a bit shaky, but we are hoping to get more shipments (of meat) into the United States and Japan.

Pastoral conditions are looking good with the drought ending in Queensland and good grass around the country.

Producers have also improved efficiencies over the last few years, which is also making our meat more attractive.”

The signs for a buoyant 1999 are there, but a lot hinges on the current favourable exchange rate staying put.

The Australian dollar currently buys about 61-62US¢, but before the Asian crisis hit the Australian dollar was above 70US¢.

Last year, Australian meat exports hit a record 850,000 tonnes to 130 different countries thanks to this favourable exchange rate.

Saleyard prices also increased for the second year in a row in 1988, with Jap Ox increasing by 7%, young cattle up 9% and cows rising by 10%.

Meat and Livestock Australia, the industrys revamped peak marketing body, also believes the industry is on the up.

MLA manager of market information and analysis Peter Weeks said there was growing confidence that the industry had a bright outlook over the next two to five years.

Speaking to The Weekly Times, Mr Weeks said the main positive for 1999 was that world beef supplies were down. “Cattle supplies around the world are down, providing a reasonable stimulus for prices.”

The USA, in particular, had reached the peak of its production cycle and was heading for a sharp drop in production in the second half of 1999 as turnoff rates dropped away against a background of herd rebuilding.

Similarly, New Zealand faced a production decline of about 10% this year, while Argentina was looking to rebuild its low herd size and would be a small player on the world market for several years, he said.

In addition, Australian production, after jumping to almost two million tonnes last year as farmers offloaded their drought-ravaged herds, is also expected to drop by 5% in 1999 as producers respond to the improvement in seasonal conditions during the latter half of 1998 and rebuild herds.

However, a rising exchange rate or a sudden jump in local production could end the party for Australian beef farmers.

The MLAs forecasts for 1999 are based on the Australian dollar remaining at an average of 65US¢.

“But some analysts are predicting that the Australian dollar could be back at 70US¢ by mid-year.

That could wipe out the modest improvements we are forecasting,” he told The Weekly Times.

A$1 = 63.4US¢, today, 09 March, 1999

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