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This article was published in 1964
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INSTITUTE OF INSPECTORS OF STOCK OF N.S.W. YEAR BOOK.
The Future of the Beef Cattle Industry in Australia
J. L. SHUTE, O.B.E., Chairman of the Australian Meat Board.
I am confident that there is a great future for the beef cattle industry in Australia.
This confidence is based on a number of factors:—
- We have a tremendous cattle production potential.
- We have established herds of beef cattle, which have proved very adaptable to Australia's varying environmental conditions.
- Australia's stud and commercial cattlemen have shown that they can breed the types of animals which will produce the classes of meat required by our major markets.
- I believe all sections of the Australian meat industry are capable of and will meet changing conditions as they arise.
- The industry, as such, is more effectively organised today than ever before, and thereby better equipped to grapple with recurring problems.
- I believe the world demand for beef will increase and spread over many countries, some of these being favourably located geographically to Australia.
AUSTRALIAN CATTLE NUMBERS.
In March, 1963, Australia had a record 18.5 million head of cattle, whereas prewar the number was about 13 million, and even 10 years ago there was just over 15 million. While dairy cattle numbers have remained relatively stable over the last few years, the number of beef cattle has continued to rise, reaching a peak of 13.4 million in 1963. It is significant as a pointer to the future development of the industry, that a high percentage of beef cattle are represented by cows for breeding.
For comparative purposes as against our 18.5 million head of cattle, Ireland has 4.1 million, New Zealand 7.7 million, United Kingdom 12 million, France 21 million, Mexico 23.5 million, and U.S.A. 107 million.
AUSTRALIAN BEEF AND VEAL PRODUCTION.
Australian beef production in the year ended June, 1963, was 904,000 tons, only just short of the record 1959 output of 906,000 tons. Greater attention is nowadays being given to animal husbandry, while calving percentages have been on the increase for some years.
AUSTRALIAN BEEF AND VEAL PRODUCTION.
| Average 5 years ended June | 1,000 Tons |
|---|---|
| 1953 | 618.4 |
| 1958 | 756.3 |
| 1963 | 797.4 |
The output of beef and veal during recent months suggests that the total for the current year could be even higher than the 1963 output. It would be reasonable to assume that Australian beef production could easily reach 1,000,000 tons in the foreseeable future.
Seasonal vagaries make it impossible to predict accurately the future course of Australian beef production. Much is now being done in Australia, however, to cope with unfavourable seasons, and it can be anticipated that, as years go on, production should be more stable than in former years.
Overall prices can also have a market bearing on production.
AUSTRALIAN BEEF CONSUMPTION.
Australian beef consumption recovered significantly in 1962/63. Total beef consumption (including canned beef), which amounted to 554,000 tons in 1957/58, had dropped to 424,000 tons in 1960/61. Over the last two years, consumption has continued to rise, and in 1962/63, the total had risen to 494.000 tons.
Per capita consumption of fresh beef which stood at 125 lbs. in 1957/58 dropped to only 85 lbs. in 1960/61. It recovered to 98 lbs. in 1962/63, the rise being at the expense of mutton.
AUSTRALIAN AVERAGE ANNUAL BEEF AND VEAL CONSUMPTION (INCLUDES CANNED).
| Average 5 years ended June | Consumption ‘000 Tons (Carcase equivalent) |
|---|---|
| 1953 | 470.6 |
| 1958 | 517.3 |
| 1963 | 469.4 |
The Australian consumer is a very important factor in the economy of the beef industry. Despite the fall in beef consumption in recent years, Australians still consume, per capita, approximately the same amount as U.S.A. citizens.
The strong U.S.A. demand for Australian beef, over recent years, has led to higher domestic beef prices which in turn have adversely affected our beef consumption. There has, at times, been an inadequate quantity of quality meat available to meet domestic demand. Per capita consumption last year of 98 lbs. per head was about 5% more than that of the previous year and 14% more than in 1960/61. To restore consumption to the level of a few years ago, when Australian per capita consumption of beef was 125 lbs., is one of the challenges to the industry. We have a genuine commodity to promote.
There has been considerable discussion on the desirability of grading, the prospects for lot fattening and other problems associated with the development of the industry. These issues call for the most careful investigation and evaluation and with some, at least, it is likely that the industry will need to hasten slowly. It is inappropriate in many cases to look to U.S.A. as the pattern to imitate in view of the entirely different dimension and environment of the U.S.A. market.
MEAT PROMOTION
The industry still has before it the question of the desirability of promoting meat, including beef, in Australia.
Some years ago, the Australian Meat Board engaged the services of a firm of management consultants to ascertain whether national promotion would benefit the meat industry and, if so, what form such promotion should take. The results of the survey were discussed at a conference held in December, 1962, when representatives of various sections of the industry were present. The conference also considered the outline and probable cost of a meat promotion programme for the industry prepared by the Australian Meat Board. This question is still before a working committee of federally constituted meat organisations.
It is generally conceded that the Australian market is the best market for Australian meat and the Meat Board believes that everything should be done to cultivate a confidence in the Australian consumer. Every effort should be made to maintain supplies, twelve months of the year, of the classes of meat desired. The product should be presented in the form most acceptable to the user, and every endeavour should be made to ensure that the meat is provided at a just price.
EXPORT MARKETS.
In 1958, the U.S.A. market accounted for 4% of our beef exports, whereas in the year ended June, 1963, the proportion had risen to 78% as illustrated in the table below.
AUSTRALIAN BEEF AND VEAL EXPORTS (INCLUDING CANNED)
Actual Weight Shipped.
| U.K. | U.S.A. | Other Destinations | Total Exports | |||||
|---|---|---|---|---|---|---|---|---|
| Year Ended June | ‘000 Tons | % | ‘000 Tons | % | ‘000 Tons | % | ‘000 Tons | % |
| 1958 | 120.8 | 75.5 | 6.1 | 3.8 | 33.0 | 20.7 | 159.9 | 100.0 |
| 1959 | 174.4 | 66.6 | 57.4 | 21.9 | 30.1 | 11.5 | 261.9 | 100.0 |
| 1960 | 97.8 | 45.9 | 87.9 | 41.3 | 27.2 | 12.8 | 212.9 | 100.0 |
| 1961 | 49.0 | 33.4 | 76.3 | 52.1 | 21.2 | 14.5 | 146.5 | 100.0 |
| 1962 | 46.4 | 20.9 | 151.2 | 68.0 | 24.8 | 11.1 | 222.4 | 100.0 |
| 1963 | 31.9 | 12.0 | 208.8 | 78.3 | 26.0 | 9.7 | 266.7 | 100.0 |
| Average 5 years ended June | Exports expressed as % of production. |
|---|---|
| Av. 5 years ended June 1950. | 24.9 |
| Av. 5 years ended June 1955. | 26.2 |
| Av. 5 years ended June 1960. | 33.8 |
| Year ended June 1962. | 42.1 |
| Year ended June 1963. | 44.1 |
During the seven months ended January, 1964, Australian exports of beef and veal (173,000 tons) were about 7% greater than the tota! for the corresponding period of the previous year, due largely to increased shipments to U.S.A.
Australia continues to be the principal supplier of U.S.A. beef imports as shown below:—
Share of U.S.A. Beef and Veal Imports
| Calendar Year | Australia % | New Zealand % | Other Countries % | Total % |
|---|---|---|---|---|
| 1959 | 37.2 | 27.0 | 35.8 | 100.0 |
| 1960 | 34.6 | 31.5 | 33.9 | 100.0 |
| 1961 | 40.7 | 27.1 | 32.2 | 100.0 |
| 1962 | 52.2 | 24.5 | 23.3 | 100.0 |
| 1963 | 51.6 | 25.2 | 23.2 | 100.0 |
(NOTE: Ireland and Mexico are the other major suppliers.)
Beef imports into U.S.A. are equivalent to about 8% of domestic beef production when converted to a carcase equivalent basis. If the meat equivalent of live animals imported from Canada and Mexico is added, imported beef, both as meat and on the hoof, represents about 9% of U.S.A. beef production. Our beef exports, which are mainly in the boneless form, are well suited to the requirements of the North American market, which looks for a lean meat suitable for blending with domestic meat of a higher fat content. Australia is able to supply the type of meat which is in short supply in U.S.A. — manufacturing beef. The U.S.A. market is not short of quality beef, and there is no purpose in Australia developing the export of its higher quality beef to that country, a course which will only intensify the opposition of U.S.A. domestic beef producers.
For the last five years, cow slaughter in U.S.A. has been at a low level, a development which has reduced considerably the domestic supply of beef for manufacturing. Over that period, cows represented only 22% of all cattle slaughtered under Federal inspection compared with 33% in the previous five year period.
The U.S.A. population is increasing at the rate of about 3 million per annum. The W. D. Scott survey of the North American market forecast that increased production would just about cope with the growing requirements of the American people.
The Australian Meat Board has done everything possible to maintain the position of Australian meat in the U.S.A. market.
In October, 1962, a conference was held at Denver between producer representatives of the Australian and New Zealand Meat Boards and representatives of U.S. domestic cattle and sheep and lamb producers. In December, 1962, Australia was represented at a conference of U.S. lamb feeders at Des Moines, while in the following month we were again represented at a convention of the U.S. Cattlemen's Association at Las Vegas.
In September, 1963, a further conference of representatives of the U.S. National Cattlemen's Association, producer representatives of the Australian Meat Board and representatives of the New Zealand Meat Producers' Board, was held at Surfers Paradise. Australia has maintained a close liaison with U.S. domestic producer interests.
In addition, the Australian Meat Board engaged the services of W. D. Scott to conduct a comprehensive survey of the North American market to ensure that it was fully informed on the nature and development of the U.S. market for our manufacturing meats, and to assist it in determining the policy it should follow in protecting the good name of the Australian product and safeguarding its marketing position.
Australian meat producers and exporters alike have been apprehensive as to the future of the U.S.A. market for Australian meat. All sections have, therefore, welcomed the recently announced agreement between the Australian and U.S.A. Governments which has assured Australia of a market for its meat, estimated to be worth, based on 1963 export and prices, approximately £90 million a year. Under the agreement, Australia will have access to the U.S.A. market for 242,000 tons of meat in 1964 — about 6% less than last year — 251,000 tons in 1965 and 260,000 tons in 1966, the latter years providing for a growth factor of 3.7%. Either party is at liberty to conclude the agreement at the end of any calendar year provided that it gives notice of its intention six months earlier.
The agreement with the U.S. has tempered the fears of many Australian meat exporters and service works who are committed to extensive investment if they are to comply with U.S. Department of Agriculture requirements which became operative on 1st May, 1963, and which relate to the standards required of overseas meatworks supplying the U.S.A. market. These standards apply to all federally inspected works in the U.S.A. Until the agreement was signed there was widespread doubt as to whether the U.S.A. market would offer such security to the Australian exporter, as to warrant the investment expenditure necessary.
The agreement itself, however, may not represent the last word in relation to Australia's association with the North American market. There is still strong pressure on the U.S. Administration from domestic producers for greater protection through the agency of increased tariffs and/or quotas. In April, 1964, the Board intends to give evidence before the United States Tariff Commission and the Trade Information Committee during its inquiries in connection with the effect of imported meat on the returns to the American cattle producers. Considerable interest will be focussed on these hearings, and any contemplated action to alter the status quo insofar as foreign meat imports are concerned. As has already been pointed out, either party to the agreement can withdraw providing prescribed notice is given.
The increased self-sufficiency of the U.K. beef market has meant that imports have fallen substantially in recent years. Prewar U.K. beef production accounted for one-half of its domestic consumption, whereas the proportion is now three-quarters.
Australia's share of the declining U.K. beef import trade has fallen. For example, some 460,000 tons of beef were imported into U.K. in 1957, of which Australia accounted for 132,000 tons or 29%. In 1963, imports from all sources amounted to 358,000 tons, which included only 18,000 tons of Australian beef, representing 5% of the total. Over recent years, a much greater proportion of our beef has been shipped in the boneless form so that the decline in our beef trade to U.K. has not been quite as severe as actual shipments suggest.
Most of Britain's beef imports are still represented by chilled beef. In 1963 Argentina supplied 201,000 tons of chilled beef (28% more than in 1962), Uruguay 26,000 tons and Yugoslavia 12,000 tons. The tonnage for Yugoslavia represents only about one-third of the quantity of chilled beef imported from that country in 1962. That country has made quite an impact on the U.K. market over the last few years. In 1962, my colleague on the Board, Mr. F. J. Horwood, and I visited Yugoslavia where we inspected lean young bull beef, which had been well received by the U.K. market. Early in 1963, the Board initiated a survey into the requirements of the U.K. market, since it was believed that our competitors, such as Yugoslavia, were then supplying a type of product which was more acceptable than Australian meat. Following discussions with Australian exporters, new regulations were introduced which provided for minimum standard specifications for the more important export cuts for the U.K. market. This involved the type of cut and, in certain instances, fat cover, and trimming. For boneless meat packs, the maximum fat content was also prescribed.
It is impossible to forecast what will be the position of our chilled beef trade in future years. In 1963 only 4 tons of Australian chilled beef were imported into U.K., compared with 1,700 tons in the previous year, and an average of about 26,000 tons prewar. Under present conditions, the Australian shipper finds it more economic to ship beef in the frozen form. Extensive research is now being undertaken in relation to production and marketing of our beef, as well as future oversea developments. The attitude of consumers towards the fresh, chilled and frozen product could alter the position in future years.
It cannot be too strongly emphasised that the U.K. market for meat is not a normal market in the real sense. Whereas the U.S. Trade Expansion Act of 1962 favoured conditions of relatively free world trading in which each nation produced and sold according to its economic advantage, a large part of the meat which is available on the U.K. market is heavily subsidised. Recently U.K. livestock producers have received as much as £33 E.C. per head subsidy on cattle.
In the year ended March, 1963, U.K. subsidies for livestock production, in one form and another, amounted to more than £140 million E.C., almost half of which was paid to cattle producers. About half of the cattle subsidy arose in connection with the operation of the price guarantee scheme.
Considerable interest will be focussed on the impact of the forthcoming G.A.T.T. Meat Group discussions under the Kennedy Round of international trade negotiations on the tariff policy of the world's major importers, including U.K. Australia has its rights under the 15 Year Meat Agreement with the U.K. Government which ensures that Australian meats will continue to enjoy quantitative free entry into that market until September, 1967.
It is impossible to predict the future requirements of the U.K. market, or for that matter, the conditions under which Australian beef will enter. There is still much speculation as to the position of Britain in relation to the European Common Market.
Currently, it is more profitable to export first and second quality cuts to the U.K. market than to North America. Present indications are that Australian exports of beef to the U.K. in the current year will be greatly in excess of exports over recent years. This is primarily due to price. Judging from the demands being made from other Continental countries for beef and the inability of traditional suppliers to meet their requirements, it could easily be that Europe will play a more significant role in import ing Australian beef in the foreseeable future than has been the case in recent years.
Our dependence over recent years on the U.S.A. market, and, to a lesser degree, the U.K. market highlights the vulnerability of our beef export trade to any adverse change in marketing conditions for meat in those countries. Other markets account for only 10% of our beef export trade.
Last September, at Surfers Paradise, Australian producer representatives assured members of the American National Cattlemen's Association that Australia realised that the time had arrived when positive action had to be taken to develop alternative markets for our beef. It was pointed out that the Board had accepted a recommendation of the W. D. Scott North American Survey, that a levy should be imposed on all livestock slaughtered to provide a fund to finance meat industry research, meat promotion in Australia and overseas, incentives to develop overseas markets, and administration of the Australian Meat Board. The Board had previously indicated that these recommendations could be more effectively implemented, if it were given statutory authority to buy and sell meat, having in mind the opportunities and desirability of establishing goodwill at the appropriate time in underdeveloped markets. A Bill to give the Board such statutory power is to be introduced to the Federal Parliament during its present session.
Apart from recent visits of its officers to Japan and the visit of Board members to the Continent, the Board has participated in various trade missions to the Middle East in January/February, 1962, the Persian Gulf in February/March, 1962, and the Caribbean in October, 1962. During the current year, the Board has booked display space on the "Centaur" Trade Ship to the Far East. A display panel has been prepared on behalf of the Board depicting, by means of pictures, figures, maps and diagrams. the background story of the Australian livestock and meat industry. This supplemented exhibits of individual meat exporting organisations.
It is hoped that, as a result of the surveys of the North American and United Kingdom markets, the study undertaken into the desirability of meat promotion in Australia and overseas, together with other action being taken to strengthen the position of our beef trade at home and abroad, it will be possible to maintain the development of our beef industry on a sound basis.
We have entered into a new phase of meat industry development. It would seem that much more attention will need to be given to marketing than has been the case in the past.