Processors winning in lower prices for livestock

International investment in Australian agriculture is favouring beef and cropping operations over dairy and sheep. See our rolling coverage.

International investment in agriculture is playing favourites, with beef and cropping in and dairy and sheep out.

And it’s about familiarity with industries and relative simplicity in the favoured industries that are the key factors in determining where the money goes.

ANZ head of agribusiness insights Michael Whitehead told The Weekly Times one of the reasons investors looked particularly at beef and cropping was because there were “relatively fewer moving parts and less potential for things to go wrong”.

This was in comparison to the sheep industry where the operations were more fragile.

Mr Whitehead said large global investors were much more familiar with beef than sheep, where Australia was a significant player in the world.

Dairy also had too many “moving parts”, Mr Whitehead said.

“Cropping, you put a crop in the ground, you provide your inputs, you hope the rain comes but you will always have a good global market for grain,” he said.

“It may go up and down, depending on how much is produced in the rest of the world, but it (the market) will always be there with certainty.

“You will always have a good global beef market too and you may worry that something catastrophic may go wrong in terms of biosecurity, but the market will always be there.”

In comparison, the sheep market was less certain, and the global dairy market was in a similar position.

Beef was also attractive as operations were of the scale that could attract investments of several hundred million dollars.

Mr Whitehead said Middle East capital had been investing in agriculture for some time and “we have seen them come and go”.

“What is important to remember is that the food security issues are absolutely still there – they have some assets here but will continue to look not only at sheep investments,” he said.

This meant sheep properties could be the attention of countries that were big consumers of sheep meat.

And he said they may be open to other opportunities.

“Countries want food certainty so if another pandemic came back, they would have access to a healthy supply of food through disruptions.”

Countries which could potentially invest in Australian agriculture could include India and south-east Asian nations because they were growing in their investment ability, both from governments and the private sector.

“The world has changed – they’ve gone from places that were absolutely as developing countries relied on food imports to having a lot of wealth,” Mr Whitehead said.

“They are looking at opportunities in Australia and they also have great expertise.”

Earlier: Cattle prices in processors favour

Cattle prices are “absolutely” in the processors favour but the turn in fortunes is not unique.

That’s the view of Australian Meat Industry Council chief executive Patrick Hutchinson, who told The Weekly Times processors were reinvesting profits back into the industry as they upgraded the supply chain.

“We’ve got a scenario at the moment where seasons have turned, and we have a huge amount of supply,” Mr Hutchinson said.

“The supply and demand curve from 2021-2022 was pretty much in the producers’ favour.

“That meant we saw world record prices for livestock here in Australia and that’s obviously turned now.”

Patrick Hutchinson, chief executive of the Australian Meat Industry Council. Picture: John Feder

But Mr Hutchinson said the pattern of prices – where they were more beneficial for producers or processors – was not unique.

“It’s a cyclical issue in a cyclical market,” he said.

“The same pattern is being seen now in the United States, as supply tightened and prices go up.”

Prices are now running well in the favour of processors, but Mr Hutchinson said it was important to understand that this was not all bad news for producers.

“Prices are in the processor favour, so to speak at the moment, but we need to take a value chain approach to this and a 10-year outlook and how that balances out,” he said.

“We need to look at how much money remains in the supply chain, who gets access to it and how they are utilising it and investing it.

“We need to be looking to the future of how we supply more red meat domestically and internationally.”

Mr Hutchinson said some processors were reinvesting the better profit margins in upgraded facilities including one at Tongala, while others were increasing cold shortage including one facility in Western Australia that had recently opened at a cost of $50 million.

“These are the sorts of investments companies are making in order to ensure the industry is prepared for increased supply or different markets or different ways of storage or freezing or logistics – these all go on behind the scenes.

“Everyone sees the cattle but they don’t see when cattle are disassembled and sent all around the world.”

When it comes to sheepmeat, Mr Hutchinson said the nation’s processors were working on relationships with India, but described progress as a “slow burn”.

Selling more beef and sheepmeat in the United Kingdom was also another market where volumes could grow.

For beef, Indonesia, Thailand and Vietnam all offered scope, Mr Hutchinson said.

Earlier: Why Herefords are making their mark in the United States

Whiteface cattle are making a comeback in the United States as they stand on their credentials for fertility,

American Hereford Association chief operating officer Shane Bedwell said breeders had done “a phenomenal job of improving the cattle and making them better”.

The breed had a lot of heritage and history in the US but the work of breeders had elevated the genetics to a new level, he told The Weekly Times at Beef 2024 at Rockhampton, Queensland.

American Hereford Association chief operating officer Shane Bedwell said there had been a resurgence in use of the breed and recent bull sales had set records in the US.

That is now flowing through to bull sales, which have just been completed in the US and where prices set records.

“There are new people coming to Herefords and using Hereford genetics for the first time because of the progress the breed has been able to make,” Mr Bedwell said.

“The commercial cattleman has found that if you focus on a certain set of traits too much, you lose some of the good traits that make the mama cow really valuable.”

Traits attracting US commercial breeders back to Herefords were docility, longevity, doability and feed efficiency – things that had been in whiteface cattle for a long time.

Black baldies were rated as “the best commercial female out there”, Mr Bedwell said, and the cross was becoming more popular as more producers started using Hereford bulls.

When it came to selling stock, he said black baldies sold as well as black cattle and sometimes earned a premium.

“The baldy animal has so much versatility as it can qualify for a certified Hereford beef program, it can qualify for certified Angus and it can go into a lot of different branded beef programs and that is just on the terminal side,” Mr Bedwell said.

The American Hereford Association has been doing research to prove the value of using black baldy females, looking at fertility and longevity.

“That’s where the real cowmen are finding the value of the black baldy female,” he said.

“Fertility is 12 times as important as any other trait – open (empty) cows cost the producer a lot of money.

“We are at a time now (in the US) where, considering the prices in the states (US) where getting that female to breed back early in that breeding season is worth a lot of dollars.”