Cheaper cattle prices not passed on to consumers

Producers want to know why the low prices they’re receiving at sales are not being passed through to consumers in retail outlets across Australia.

Farmers are calling for more of the significant drop in cattle prices to be passed on to consumers as cost-of-living pressures bite.

Beef producers are receiving about half for their cattle compared to this time last year but retail prices have failed to follow this downward trend — and in some cases have risen.

The benchmark Eastern Young Cattle Indicator closed on Monday at 555c/kg — down 565c/kg or 50 per cent on this time last year, while rates for heavy steers and processing cows were back more than 40 per cent.

Despite this, figures collated by NielsenIQ for Meat and Livestock Australia show overall retail beef prices have risen 4.2 per cent in the past year while consumption has fallen 7.3 per cent across the board — and up to 30 per cent on some cuts.

Premium cuts such as eye fillet, scotch fillet, T-bone and porterhouse have suffered the biggest fall in consumer demand while beef mince has been the least affected, rising just 2 per cent in price with a healthy 1 per cent decline in consumption.

Tim Roberts-Thomson, with his children Madeleine and James, has questioned why more of the drop in cattle prices is not being passed on to consumers. Picture: Yuri Kouzmin

Leading southern Australia beef producer Tim Roberts-Thomson said there seemed to be a black hole when it came to working out who was making the margins now cattle prices were significantly lower.

“I understand there is a lag time between when cattle go into a feedlot (and when they are sold as meat) but that 120-180 days is well and truly passed,” Mr Roberts-Thomson said.

“I am not sure where the profit is being kept.”

Mr Roberts-Thomson — whose TRT Pastoral operates one of Australia’s biggest privately-held Angus herds with 9000 breeding cows across 18 farms in Victoria and Tasmania — said red meat prices domestically were a “hot topic” and while the domestic market may not be rated as highly by some processors, it was still critically important.

“If those lower prices were passed on to consumers, consumption of beef would lift,” he said.

“Too many people are saying meat is too expensive.”

Processors told The Weekly Times they were merely recouping returns from years of high cattle rates while retailers said they had dropped beef prices even within the past month.

Australian Meat Industry Council chief executive Patrick Hutchison said processor margins had improved with the increased availability of livestock.

But he said the increase in other operating costs for processors meant profits “aren’t out of step with other periods of increased supply”.

“Just as it for producers, profitability is cyclical for processors,” Mr Hutchison said.

“Improved processor profits will enable the sector to invest in upgrading facilities and installing new technology – critical investment to process increased numbers of livestock expected to come through in coming years and for Australia to remain competitive on the global market.”

Prices for producers have halved but this has not been passed on to consumers.

Victorian Farmers Federation livestock president Scott Young said supermarkets should hold sales where the drop in livestock prices was passed on to lower red meat costs.

“There has to be an opportunity here to get people buying red meat again when they may have turned away from it as the price rose,” Mr Young said. “The low prices we are getting as producers are not translating back to the supermarket shelves.”Both major supermarkets have defended their price policies, and said they had cut beef prices in recent months.

A spokeswoman for Woolworths said it operated in “a highly competitive market, and we work to deliver the best value possible to our customers”.

“Australian cattle prices have recently dropped in response to a range of factors, and we thank our suppliers for working closely with us as we sensitively respond to industry-wide changes in the market,” the spokeswoman said.

Coles said it, too, had dropped prices to consumers. “With some livestock prices starting to ease, we have invested heavily into our newest Dropped and Locked Campaign and focused on red meat, particularly beef,” the spokeswoman said.

One regional butcher, who did not wish to be named, said there had been a slight fall in the cost of a body of beef from last year, from about $10.80/kg to $9.80/kg.

But rising costs to run his shop, including insurance, power, wages and fuel to deliver meant it was impossible to pass this on to consumers.

He said he watched cattle prices carefully and had “never seen the game change so quickly”, both when they were rising and then how quickly they fell.