Meat Being Competitive Competitiveness of Australias Intensive Livestock Industry

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Meat Being CompetitiveCompetitiveness of
Australias Intensive Livestock Industry

• Dr. Peter C. Scott
• Scolexia Pty Ltd
• ABARE Outlook 2008

• www.scolexia.com

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The Meat Sectors

• Chicken Meat
• Dramatic increase in consumption
• Low cost meat with flexibility
• Predominantly domestic market, few companies
• Beef
• Domestic demand still remains high
• Export markets significant

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The Meat Sectors

• Lamb
• Consumption 50 cf. 1960-70s
• Predominantly under extensive grazing systems
• Less than 10 in feed lots, considerable export
  potential
• Pork
• Consumption 50 of chicken and beef
• Industry affected by imports
• Industry rationalisation

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Consumption of Different Meats over past 60 Years
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Production
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Retail Prices for Meat in dollars of the day
(1970 2005/06)
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Retail prices for beef, lamb, pork and chicken
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 Retail Prices for Meat in 2006 dollars (i.e.
adjusted for inflation 1970 2005/06)
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Factors Affecting the Relative Competitiveness

• Feed
• Beef, chicken, pork
• High grain prices and drought
• World wide shortage of grain for livestock
• Australian transparency in the grain market,
  grain import and restricted access, AQIS and
  single desk
• GMO crops

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FEED (Cont)

• Chicken FCE 1.7 to 1.9
• Pork FCE 4.0
• Beef and Lamb FCE 6 to 8
• Ruminants can eat grass
• Beef can consume more diverse feed ingredients
• Raw material purchasing, strategies and
  formulation
• Ethanol/Biodiesel demand, subsidies, net
  environmental benefits, socioeconomic
• Feed grain market
• Water

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Production Efficiencies

• Chickens improvements in FCE, imports of new
  genetic material every 6 months
• Pigs FCE 4.0 (Aust.) cf 3.6 (USA)
• Scope in the pig industry for improvement
  genetic, husbandry, housing, feed formulation
• Pigs Reproductive Efficiency, pigs/sow/yr 20
  less than Europe

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Chicken MeatIncrease in Production Efficiency
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PORK
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Production Efficiencies (cont)

• Generation times between the various livestock
• Response to market fluctuations
• Herd recovery times
• Biological entities that need to be maintained

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Export / Import Markets

• Chicken meat domestic
• IRA, importing countries, arguments to gain
  entry
• Australias health status
• Pork
• Imports allowed, some exports
• 90 consumed domestically
• 40 fresh and 60 processed of which 50 is
  imported
• Importers have Export Enhancement Programs or
  grain subsidies
• Developing volume based inefficiencies
• Singapore, AVA approval

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PORK
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(No Transcript)
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Export / Import Markets (cont)

• Beef
• Protected from imports and a strong export market
• Brazil and USA
• Traceability and QA programs
• Limitations in specific portions and cuts
• Future exports favourable competition against
  other meats and increasing grain costs

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Australia v/s Brazil cattle prices
Increased US demand US BSE bans
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Export / Import Markets (cont)

• Lamb
• Domestic and export market
• Limited competition and current a global demand
  that cannot be met
• Grass production limiting impact of grain prices
• Competitive against grass fed beef

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Australian Currency A

• Beef, lamb and pork less competitive on the
  international market
• Chicken, domestic based
• High A price of grain, imported vegetable
  proteins, exported meat meal.
• Farming and processing equipment
• Pork
• High A negative on exports and positive on
  imports!!

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Regulation and Compliance

• Increasing area of cost and impact on
  competiveness
• Chicken cf Pork and imports
• Feed additives and medications
• Australian EU orientated cf USA / Latin America
• Desk top activities vs. actual activity
• Korea-US FTA, tariffs 40 to Zero over 15 years

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Disease and Livestock Health Status

• Australia favourable (New Zealand)
• Two pronged advantage
• Stops imports
• Allows access where other countries are
  restricted
• Chicken AIV and IBDV
• OIE and Compartmentalisation!
• Healthy image
• Beef
• BSE USA and Japan / Korea. Back into market?
• FMD Brazil

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Disease and Livestock Health Status (cont)

• Lamb
• No significant disease concerns
• Bluetongue Surveillance and Free Zones
• Pork
• Health status international advantage imports!
• PMWS, CSIRO and 95 chance!
• Domestically moderate endemic health status
• Cultural change in approach required

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WELFARE

• Impact on cost of production Comment
• Disparity with other countries
• Layer cages (US), sow crates, stocking density,
  etc.
• Domestically
• Pigs and poultry
• Local welfare activity does not apply to imported
  products

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Climate Change / GWP / Foot Print

• Increasing consumer concern determine buying
  preferences
• GWP 50 gt for ruminants than for pigs and
  poultry GWP taxes
• ChickengtPigsgtLambgtBeef
• Chickens breeding, FCE and weight gain
• Alternate production systems Free range,
  organic--- re evaluation
• Global warming in Australia will affect regional
  production areas

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Research Development

• Competiveness depends on
• Efficient cost of production
• Low cost processing
• Efficient packaging and distribution
• Marketing
• Chicken
• RIRDC, Poultry CRC, Recognised, States
• Marketing!

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Research Development (cont)

• Pork
• Declining investment based on levies in
  declining numbers
• Beef and Lamb
• Meat and Livestock Australia
• Proportionally low compared to the grain industry
• Levy based (transaction) and not as a of GDP.
  Consistently lt 0.5 of GDP

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Acknowledgements

• ABARE
• Alltech
• Australian Lot Feeders Association
• Australian Pork Limited
• Chicken Meat Federation
• Meat Livestock Australia Ltd
• QAF Meats
• Ridley Agriproducts
• Sheep Meat Council