THE Australian beef producers’ share of retail dollar spend on beef has moved lower over the past three months, after trending higher for much of the previous year.
The recent release of December quarterly Consumer Price Index data from the Australian Bureau of Statistics provides the opportunity to update the quarterly producer share of retail dollar calculation (see details below) published jointly by analysts Episode3 and Beef Central.
As can be seen on the graphs above and below, the combination of lower cattle prices and higher retail meat prices during the December quarter has seen beef producers’ share slip.
Australia’s livestock markets experienced mixed trends in saleyard and retail prices, impacting producer share values. Cattle prices at the saleyard level declined from 690c/kg (carcase weight basis) in the third quarter to 669c/kg in the December quarter, while retail beef prices increased from $25.75/kg (retail weight) to $25.96/kg over the same period.
This divergence led to a drop in the producers’ share of retail value, falling from 39pc in the September quarter to 37.5pc in December, reflecting weaker saleyard conditions despite retail price increases.
This time last year, the beef producer share of retail $ dropped to its lowest point since the data-set began back in 1998, at just 25.8pc in December quarter 2023. That coincided with lower cattle prices, as the market faced a pessimistic weather forecast from BOM for summer, and residual concerns over the prospect of a Lumpy Skin Disease incursion in Australia.
Further back in 2022-23 when cattle prices were at record levels, the producer share index graphed above soared to record highs at almost 60pc.
The most recent retail share figure for beef continues to sit well below the long-term trend growth line, as indicated by the dotted line on the graph.
Lamb strengthens
Conversely, lamb prices strengthened at both the saleyard and retail levels last quarter. The saleyard price for lamb increased from 807c/kg cwt in the third quarter to 826c/kg in the December quarter, while retail lamb prices rose from $18.61/kg to $19.06/kg.
In contrast with cattle/beef, the producers’ share for lamb remained stable at 61.9pc, indicating that producers were able to maintain a strong share of the retail value.
Cattle Index vs retail index
In the graph above comparing the saleyards cattle price index versus the retail price index (1998 providing the benchmark at 100 for both) index movements further illustrate these shifts. The saleyard cattle index fell from 395 to 383 in December, highlighting weaker market conditions, whereas the saleyard lamb index (see below) increased from 436 to 446, suggesting stronger demand or a tightening supply.
On the retail side, both beef and lamb indices edged higher, with beef increasing from 262 to 264 and lamb rising from 291 to 298.
Overall, these trends indicate challenging conditions for cattle producers, as rising retail prices have not translated into higher saleyard returns. In contrast, lamb producers have benefited from increased prices while maintaining a steady share of retail value, reinforcing the sector’s resilience.
Background to the producer share of retail prices calculation
In collaboration with analyst Matt Dalgleish from Episode 3, Beef Central in 2023 launched a new quarterly series looking at trends in the beef producer’s typical share of the retail consumer’s spend on beef products.
A similar analysis was compiled by MLA for four years, before being discontinued by the industry service delivery company back in 2016. The project was originally launched as a result of producer requests during the 2012 MLA annual general meeting.
Beef Central sought, and gained MLA’s support to resurrect the discontinued series, based on clear reader interest. The same formula is used to compile the new set of results as originally used by MLA (see explanation of the calculation below).
Episode 3 and Beef Central now jointly publish a quarterly report, soon after ABS quarterly retail beef price data is released.
The exercise sees national saleyard cattle prices in carcase weight terms being converted into an estimated retail weight equivalent and compared to average retail beef prices, as reported by ABS.
About the producer share of retail spend calculation
The beef producer share of the retail dollar is calculated using a range of assumptions:
- The national saleyard trade steer indicator is used as the benchmark livestock prices, representing animals suited for the domestic market. Livestock prices are collected by MLA’s NLRS.
- Converting the carcase weight price to an estimated retail weight equivalent price is achieved using a retail meat yield for beef of 68.7pc.
- The indicative retail meat prices are calculated by indexing forward actual average beef prices during each quarter, based on meat sub-group indices of the Consumer Price Index, provided by ABS. These indices are based on average retail prices of selected cuts (weighted by expenditure) in state capitals.
The producer share is calculated by dividing the estimated retail weight equivalent livestock price by the indicative retail price.
Click the links below to read earlier reports in this series, and Beef Central’s original story that led to the re-activation of this series:
Should cattle producers be paying more attention to retail margin share?
I think this number should be on every packet of beef sold so consumers are aware
Also this seems a lot different to the US???
I’d be very interested to see a comparison chart / discussion on this???
You’re right, Jason, it’s a lot different than the US – but it’s important to remember that the two cattle cycles (US and Australia) are at opposite ends. The US herd is at 60 year lows this year due to drought, and cattle prices have gone crazy, as a result. Australia had its turn in 2022, when cattle prices skyrocketed during drought recovery. Its impossible to compare the producers’ shares in each country for this reason. Editor
Well that’s why 20 – 30 yr charts are such a good illustration
My feeling is Australian producers have had 2 good years in the past 30, the US guys will have been in front of us 90% of the time.
I disagree with you on cycles too – much of Australia has had 4 good years in a row – once we enter our next east coast drought prices will plummet even further
I also know wages, energy, everything costs more in Australia- so I’m not trying to belt the processors