A report by economic consultancy ACIL Tasman claims that profits for some northern cattle producers would more than double if large-scale processing plants were established in the Northern Territory or northern WA.
The ACIL Tasman study, commissioned by the World Society for the Protection of Animals and released last Thursday, considered the costs and benefits for northern Australia of transitioning from live exports to a chilled beef export trade.
The report concluded that if 400,000 cattle were processed in northern abattoirs rather than shipped to Indonesian feedlots, it would contribute an additional $204 million to the regional economy as well as an additional 1300 jobs.
The report also predicts that for some northern beef producers, the access a northern abattoir would provide to alternative markets could increase earnings before interest and tax by up to 245 percent.
“Creating a market for surplus females would provide the incentive to significantly improve herd performance, as producers could sell meat from lower performing females and replace them with selected younger cows from each calving. This would increase herd fertility (and) reduce cow mortality,” the report states.
“… For some producers who are currently reliant on the live export trade, a regional market for steers could significantly improve the profitabilty of their business by allowing them to produce more saleable beef.”
However the report says that the live trade would need to continue to play a role in the medium term to provide northern producers with a market for light feeder steers and to accommodate the large seasonal variations in cattle supply that a processing market would not be able to manage.
It also acknowledges that regions without an abattoir would experience “a small loss” in their total real incomes and employment if the live export trade was replaced with domestic processing, as they lose the local value-added associated with the live export trade as well as receive a lower farm gate price.
The report estimates that the cost of establishing sufficient processing capacity to process up to 400,000 head of cattle per annum would be approximately $160 million.
ACIL Tasman says its financial modelling suggests a northern abattoir would produce “a commercially attractive rate of return” with no-ongoing government support required.
There are currently no northern abattoirs operating north of a line between Townsville and Perth.
Why that is remains subject to debate, with stated views including the difficulties that wet seasons and lack of finishing country present to available supplies of cattle at viable processing weights in the north, constraints on required labour, the impact of the Tuberculosis and Brucellocis eradication scheme on cattle supply for northern abattoirs in the 1970s-80s and the competition from live cattle exports since that time.
The full ACIL Tasman report can be viewed here
Indo trade minister upbeat on livex future
Meanwhile Indonesian trade minister Gita Wirawan has painted a positive picture of the future for live cattle exports by saying his country is 'not close-minded' about importing more Australian cattle.
In Canberra last week, Mr Wirawan said he wants to see Indonesian beef consumption increase “tenfold” from 2kg per head to 20kg per head, and says that would have to involve imports.
'We are not close-minded about that,' he said of lifting the Australian beef quota, as quoted by Sky News.
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