Industry Must Forge Ahead Amidst Challenges

AUSTRALIA - Meat & Livestock Australia Chairman Don Heatley has urged the Australian red meat industry to remain consumer focussed whilst also acknowledging the huge impact the ongoing drought, a record-high Australian dollar and rising grain prices have had on the industry.
calendar icon 23 November 2007
clock icon 3 minute read

Speaking at the MLA annual general meeting (AGM) in Rockhampton today Mr Heatley said everyone in the red meat production chain, from producer to exporter, has been impacted by the difficult trading conditions.

“The drought, combined with the meteoric rise in the Australian dollar and continuing high grain prices has lead to an irrevocable change in the cost of producing red meat in Australia,” Mr Heatley said.

“We can’t compete on price, and we can’t merely operate as a commodity trade. So we now face one of our biggest challenges yet – consumers around the world paying more for red meat.

“Our resilience will be tested. We need to harness the knowledge learned from generations of experience and created by R&D, and put it into practice to overcome these challenges.

“This new order in the global arena challenges our industry to step up its efforts to be more responsive to customer requirements and community expectations, and to use the opportunity to take the lead in forging new market frontiers.”

Mr Heatley said that over the last 12 months global sales of Australian beef reached $11.5 billion, lamb and mutton values hit $3.6 billion, exports of goatmeat were worth $77 million, and the value of Australia’s livestock export trade grew 10 percent to contribute $769 million to the total value of the industry.

Beef exports continued to increase to reach a record $4.9 billion, with almost half of this coming from sales to Japan. Domestic beef consumption increased, with national expenditure jumping to a record $6.6 billion, while domestic lamb sales hit almost $2 billion in 2006-07.

During his address at the AGM MLA Managing Director David Palmer said one of the biggest threats to the Australian red meat industry is it’s reliance on four major markets.

“I believe that Australia’s red meat industry is vulnerable in its current reliance on a few key markets. A worrying 94 percent of all Australian beef goes to just four markets, including domestic,” Mr Palmer said.

“With less than 0.5 percent of the world’s population living in Australia, the industry’s export markets are crucial to its ongoing success, and continued access to these markets is critical.

“From a food perspective, take one prime steer, which is roughly the equivalent of 500 meals in today’s market. 470 of these meals will be served either in Australia, the US, Japan or Korea. The remaining 30 meals are shared among another 102 markets.”

Mr Palmer said the industry must work hard to gain greater market diversification and identified Russia as prime example of an emerging market with great potential that the industry already has a foothold into.

“Russia is a high-value market, with demanding consumers and a rapidly growing five-star restaurant sector. Building on Australia’s global reputation as a supplier of high quality red meat, MLA identified key importers, conducted meat quality training programs, and linked them with Australian suppliers, to capture the emerging potential of Russia,” Mr Palmer said.

Last year Australian exports of beef and mutton to Russia hit 12,500 tonnes and 11,700 tonnes respectively.

Mr Palmer also detailed the financial performance of MLA during 2006-07 in his address, of which the key points included:

  • Revenues totalled $161.8 million, compared with $154.6 million for 2005-06 – an increase of $7.2 million.
  • Total expenditure for 2006-07 was up 0.5 percent on 2005-06 to reach $159.5 million.
  • Income from producer levies on cattle, sheep and goats totalled $98 million. This was a $16 million increase on the previous year, attributed mainly to grass fed cattle levies, which increased by $13 million.
  • 39 percent of MLA revenue was non-levy income totalling $63.6 million, which was slightly down on last year. The Federal Government contributed $35.7 million of this funding.
  • After a deficit of $4 million last year, 2006-07 saw a surplus of $2.2 million after a conscious effort to build reserves given the potential reduced income due to drought.
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