Processing

Govt’s responsibility now lies with industry support

Jon Condon, 09/06/2011

 

Perspective:

The Federal Government has a responsibility to respond to the major change in dynamics that is now occurring in the northern Australian cattle industry, as a result of this week’s ban on live cattle exports to Indonesia.

Livecorp and Cattle Council of Australia are mounting a case that trade should be partially re-opened ‘within weeks, rather than months’, based on evidence of existing export/feedlot/abattoir supply chains that comply with international animal welfare standards.

Others, however, see the ban as being much more long term. Some say permanent. Either way, the Federal Government will not risk further public or voter outcry by making any hasty decisions.

So what happens to cattle in the NT, Kimberley/Pilbara, and northwestern regions of Queensland under the new industry dynamic?

Any ‘local’ processing solution is a long way off, at best, and of questionable economic viability, at worst – even without live export competition.

Teys Brothers says it has not even discussed prospects of resurrecting its mothballed Katherine plant, which has not killed for a decade. That’s not a good sign for the potential economic viability of killing cattle in the north, even in the absence of Indonesia. Even if Teys was to re-activate Katherine, the 600-head/day site would need a major injection of capital and probably five months-worth of work to get the chain moving again.

The small abattoir at Bachelor which has been reported as being about to re-open would hardly make a dent in the turnoff of cattle normally directed onto ships to Indonesia. The AA Co processing proposal for Darwin is at least 18 months away, if it happens at all.

That leaves existing processing channels in Queensland, South Australia and Victoria.

It’s worth pointing out that the most accessible processing locations in North Queensland have actually declined in killing capacity over the past two years, under direct pressure from live export competition (subsidised, in the view of processors).

Teys Innisfail never re-opened after the 2009 cyclone, and JBS Townsville now operates on a greatly reduced single-shift, five-day-week kill, shedding 260 skilled jobs along the way. At the time that reduced-kill decision was made in February last year, JBS clearly warned about the longer-term implications to industry.  

In any practical sense, the decisions about how to utilise cattle turnoff out of the live export sourcing ‘footprint’ in northern Australia is not an issue about slaughter cattle, so much as feeder/grower cattle. Steers and heifers averaging 350kg in store condition are hardly an attractive commodity to processors, and the NT does not have large areas of available finishing country to do a job on converting these animals into killable form.

Nor is the second half of the year conducive to weightgain – indeed many NT cattle often lose weight in the second half of the year. In practical terms, many northern former livex cattle may not reach slaughter-floor weight for another 12-18 months.

This basically rules-out any massive flow of northern cattle onto the slaughter market, and the strong season across the north, buying producers some time, will only reinforce this. The possible exception to this may be some switch in turnoff strategy from young cattle to grown cows, perhaps more attractive to southern processors.

One obvious solution is the old ‘northern breeding nursery, southern backgrounding/finishing’ model, that has been discussed for years. Certainly there is likely to be some flow of young cattle east and south onto better country where they can be grown out to better weights. However the genetics contained in northern cattle will limit the attraction in this, in some regions.  

Either way, the Federal Government now has a duty to step-in to support the northern Australian cattle and beef industry, in this, the most serious trade and marketing disruption it has ever faced.

Beef Central sees two areas where Government support should be directed.

The first is in simple freight cost subsidy. Some northern producers now face livestock transport costs of $150-$200 per head to ship cattle to plants at Naracoorte, western Victoria or Queensland.

At a higher level, the Federal Government must consider infrastructure support, particularly in terms of road and rail.

If ever Queensland and northern Australia needed a viable, efficient rail livestock transport service, easily accessible out of the northwest through railheads like Cloncurry and Dajarra, it is now.

In the event of a longer-term Indonesian closure, better rail and road transport infrastructure is going to greatly improve options for northern cattlemen to penetrate southern markets.

Long-haul, large-volume, point-to-point rail shipment still offers a lot of appeal to the industry, despite the disgraceful run-down of rail services by a Queensland Government eager to prioritise access by the big-spending mining industry over the interests of beef.

Federal and State Governments and industry need to come together to ensure that the nation’s rail and road infrastructure is not forgotten in this time of great need.

The Feds are currently constructing a Northern Beef strategy, while simultaneously Queensland’s Ag Minister Tim Mulherin has initiated a 2020 Beef strategy for the nation’s largest beef-producing State.

What better time for both levels of Government to work collaboratively to implement a cohesive development strategy that can serve the industry well for decades, rather than simply deteriorating into a bureaucratic talk-fest.

The worst possible outcome for the nation’s beef industry would be for northern Australia to regress back to the way it operated in the 1960s: a low-cost, low-productivity, low-input cattle ‘harvesting exercise’. In what is now a highly-competitive, highly-efficient global meat market, that would substantially impact on Australia’s ability to compete.

What a tragedy it would be if the industry productivity gains achieved across the region over the past 15 years – fuelled largely by higher income generated by live export – are lost as a result of Government inaction.

Let’s instead use this current industry crisis as a catalyst for change, that can drive the northern beef industry forward for decades to come.
 

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