WELCOME to Beef Central’s inaugural Top 25 Lotfeeders feature.

This is the second in a series of industry sector profiles to be published by Beef Central, following a similar Top 25 Livestock Transporters feature that appeared last year (click here to access).

This Top 25 Lotfeeders report profiles one of the most important sectors of the Australian red meat supply chain, providing the vital product quality and consistency link between the extensive cattle production sector and discerning beef customers, both within Australia and overseas, for Australian grainfed beef.

As the past two desperately dry years across Eastern Australia have illustrated, the feedlot industry also plays a crucial drought mitigation role in the Australian red meat supply chain, with numbers on feed reaching an eight-year high during September at 908,000 head.

To Beef Central’s knowledge, no such national survey of lotfeeders has been compiled since Meat & Livestock Australia published a Top 25 Lotfeeders report in Feedback back in 2003. That earlier report provides interesting contrasts and comparisons for our latest Top 25 (covering the 2014 calendar year) that will be discussed later in this feature.

Research for this report has been exhaustive, touching every lotfeeding state and region over the past two months, in an attempt to make this list as consistent and reliable as possible.

New content will be added to this feature daily over the next three weeks, building into the most comprehensive summary ever prepared on the nation’s grainfed beef industry, and its largest stakeholders.

This feature includes:

• A detailed statistical table (click here to view, or access via Beef Central’s home-page navigation bar) listing the largest lotfeeders by one-time operational capacity. This table will grow progressively, with new additions daily, counting backwards from No. 25 to No. 1. Additional information in the table includes the number of feedlots held by the operator, and annual cattle turnover (either supplied by the contact, or in some cases estimated by Beef Central).
• Analysis of the big trends evident among the Top 25
• Individual profiles on each of the Top 25 entrants.
• Scrutiny of some of the big issues facing the Australian lotfeeding industry.

As a handy future reference and contacts resource, the Top 25 feature articles and the table of entries will remain accessible permanently on the Beef Central website.

 

How this list was compiled

Firstly, this is a compilation of the nation’s largest lotfeeders – not feedlots – meaning some entrants will represent multiple feedlot sites. In total, there were 36 feedlots (including several representing multiple feedlot licenses) under the ownership and control of the Top 25 Lotfeeder listings. Leased feedlots were not taken into account, only those majority or wholly-owned by the operator.

The list is based on active feedlots, only. Several mothballed feedlots, or those in voluntary NFAS suspension due to inactivity, are not included. ‘Grain-assisted’ or backgrounding-type feedlot programs within feedlot operations were not included.

The list is based on capacity to feed cattle, not ownership of those cattle. Some entries own all the cattle under their feedlot management, while others own none – relying entirely on providing custom-feeding services for others. Still others fall somewhere in between, feeding some of their own cattle, plus and custom-feeding for others.

All feedlots listed operate under the National Feedlot Accreditation Scheme.

 

Assessing feedlot size

There are a number of variables that can be used to assess the size of feedlot operations. Each has its merits and its drawbacks, depending on circumstances:

• Licensed capacity (some states measure this in Standard Cattle Units or SCU, while others use simple cattle numbers). SCU rules are based on an ‘average’ beast of 600kg liveweight, but considerably more cattle of lighter weights can be fed. While some feedlots hold large licenses, they are not always ‘built’ to that capacity, for financial or other reasons. Ravensworth feedlot near Hay, in NSW is a good example. While it holds one of Australia’s largest feedlot licenses for 60,000 head, in reality it is built to a current operating capacity of only 15,000 head.
• One time, built capacity. Effectively, how many cattle the feedlot can currently hold, under current environmental and regulatory limitations. This becomes problematic as a gauge on its own, because of the range of feeding programs and cattle weights which apply across the Australian grainfed industry. Some feedlots feed only for 70-day domestic cattle less than 500kg exit weight, while others feed longfed Wagyu which may weigh 750kg at slaughter. A business feeding lighter domestic cattle can legally accommodate about 20pc more cattle than its SCU allowance, for example.
• Annual cattle turnoff 2014, in cattle numbers (head). This is inevitably biased towards feedlots feeding lighter domestic cattle, which may turn over five or more cycles of cattle per year. An equivalent feedlot feeding Wagyu cattle might turn over less than one cattle cycle per year. For each Top 25 entry, we’ve endeavoured to provide an annual turnover figure for 2014 (either volunteered by the contact, or estimated, based on discussions). The 2014 turnover figures published in this report also highlight the extreme high occupancy levels recorded by many large feedlots during 2014, due to drought pressures.
• Annual turnoff, measured in estimated tonnes, carcase weight (ETCW). Many companies are reluctant to share such information.

None are perfect, and will bring an element of bias, depending on the nature of cattle/programs employed at each feedlot. After extensive discussion with senior industry stakeholders, we’ve decided to list entries in this Top 25 feature on the basis of one-time, built capacity.

Where multiple feedlots are listed with the same operating capacity, annual throughput was used to separate entries.

It should be pointed out that these figures do not account for the degree of utilisation at each site. While many feedlots, especially in Queensland and northern NSW, have operated at close to capacity in the past 18 months due partly to drought, some others further south have been under-utilised over the past year, based on individual business decisions. While this will not affect the one-time capacity on which the Top 25 is ranked, it may show-up in the 2014 annual cattle turnoff.

 

Setting the scene: About the Top 25

While some of these topics will be discussed in greater detail in later articles, here are some of our key observations about the Top 25 entries which will appear progressively in coming days:

• Entries in our Top 25 come from all three eastern mainland states, plus Tasmania. Among the 37 feedlots owned by the 2014 Top 25 members, 22 were in Queensland; 12 were in NSW, with two in Victoria and one in Tasmania.
• Total capacity of the Top 25 Lotfeeders was about 636,000 head, or about two thirds of the nation’s entire feeding capacity.
• Using a rough rule-of-thumb of replacement value of $1200/beast area, a Top 25 feeding capacity of 636,000 head, it represents an infrastructure replacement value of about $763 million.
• Thirteen entries in the Top 25 could be termed ‘family-enterprise’ lotfeeders, but only two of those are within the Top 10.
• Twelve of the Top 25 could be regarded as ‘vertically integrated supply chain’ businesses, either extensive cattle producers aiming to retain their animals further down the supply chain, or processors/brand managers seeking to secure supply for their export programs.
• Eleven of the entries could be described as having either direct or indirect alignment with processing. Most of those are in the top half of the list.
• The business models among the Top 25 entries vary considerably. Some rely solely on custom feeding, providing a grainfeeding service for others on a contract basis; other feed virtually nothing but company-bred cattle; while still others buy all their feeder requirements out of the market.
• Twenty of the 25 entries appear to have strong supply relationships with one or more end users – whether it be supermarket contracts or long-term supply relationships to brands or processors. Fourteen of the entries appear to supply just one customer.
• Just three feedlots listed are less than 10 years old.

The operating capacity figure is up from 541,000 head in the previous 2003 Top 25 Lotfeeders profile, although it should be pointed out that feedlot businesses today tend to operate at close to their physical capacity, wherever possible, for efficiency reasons. Additionally, a much larger portion of lotfeeding today tends to be ‘program’ business, rather than non-committed, ‘spot-market’ feeding. That applies equally to domestic contract business for supermarket programs, or permanent business with international or domestic customers under beef brand programs.

Some of the other articles to appear during the course of this feature over the next three weeks will include:

• Top 25 trends: the big get bigger
• Comparisons with the previous Top 25 survey conducted in 2003
• Big investment in grain processing, shade over past ten years.

We at Beef Central hope you enjoy this important industry feature, brought to you by Lalleland Animal Nutrition, as it unfolds over the next three weeks. For future reference purposes, the feature articles and the Top 25 tabulated list will remain permanently accessible on the website.

To see this morning’s separate profile article on Top 25 listings 25-22, click here.

 

This feature is brought to you by Lallemand Animal Nutrition.

• Click here to return to Top 25 Lotfeeders table.