THE world economy is basically doomed, a new world order is emerging rapidly, and northern Australian pastoralists are likely to be major accidental beneficiaries.

That was the surprising take home message from a far reaching analysis of global affairs and possible implications for the northern cattle industry presented by market analyst Dr Ross Ainsworth to the Northern Territory Cattlemen’s Association in Alice Springs this afternoon.

Dr Ainsworth, whose South East Asian market report is published by Beef Central each month, is well known for making some predictions that have largely landed on the money – including the extent of the impact that Indian Buffalo Meat imports would have on the Indonesian market and forecasts that raised eyebrows at the time of Australian live export cattle prices reaching $4 per kg, but which have now been achieved and surpassed.

But rather than estimating where the price of beef in Lampung is likely to be in six months time, this time he used his address to an NTCA annual conference to tackle a far bigger and more challenging question – how is an increasingly turbulent global economic and political landscape likely to play out for those living and working in Australia’s northern cattle industry?

Distilled down to a single sentence his message was basically that the world economy is doomed – a message that cloaked the 500 strong crowd in an instant, sobering hush – a new global order is rapidly taking shape, he hopes like hell he’s wrong, but if he’s right, despite these enormous and worrying challenges, Australia’s northern grassfed beef industry is actually better positioned than just about any other industry to handle the coming storm.

Emphasising that he has drawn much of his analysis on facts from credible international sources such as the US Federal Reserve and the World Bank, he foresees two scenarios playing out for the northern cattle industry and live export trade as a result of a global landscape that is currently “pulling itself apart”.

One scenario is ‘less nasty’, the other very nasty, or downright ugly.

The easier, more hopeful outcome would involve a relatively smooth transition to the new world order, short term global recessions with associated bankruptcies and unemployment, political upheaval with radical changes in leadership and policies, world wide supply chain disruptions, a falling Australian Dollar and sharp rises in costs of food, grain, energy, fertiliser and chemicals.

The live cattle supply chain from Australia to Asia would have significant advantages under this scenario, he suggested.

Beef is king, it is a product the world loves to eat.

Asia needs cattle – at current ‘people to cattle ratios’ there are approximately 20 people for every one head of cattle in Asia (“they could eat all the cattle they have in a week if they wanted to”). Cattle from nearby northern Australia will remain in high demand and demand for Australian cattle from existing import customers would strengthen when the Australian dollar falls.

South East Asian feedlots use agricultural waste products, nothing at all that humans can eat, as their primary feed source and are already today, in Dr Ainsowrth’s view, the most efficient feedlots in the world.

High energy prices would also favour the live cattle/wet market supply chain model.

South East Asian economies have good demographics, including the Philippines and Thailand which would be set up to become major live cattle importers in future.

The second scenario is where a “black swan” event triggers a worldwide banking and financial collapse, global trade and energy disruption, shortages of food, energy, medical supplies (“basically everything!”), political and social breakdown and war, famine and piracy.

China would be hit hard as it relies heavily on imports for food and energy.

A China collapse would trigger a crash in Australian commodity exports and the Australian Dollar.

Growing world food shortages would mean grains would become too expensive for feeding cattle, reducing the profitability and size of the feedlot industry.

High grain prices would mean chicken and pig prices would rise sharply, and highly productive grazing land would be converted from livestock to crop production.

Feeding grain to cattle would also become too expensive – “When the world is short of food, growing crops to feed cattle will make no sense.”

“But pastoral cattle production will,” he said.

“Grassfed production in nrothern Australian production makes sense. There’s nothing else you can do on that land.”

Advantages of northern beef production would include that grassfed beef is the most efficient form of production, the minimal inputs it relies on such as lick and vaccines can be locally produced, it has energy use with capacity for greater use of renewables.

Australia also has a major freight advantage to the highly populated markets of Asia. Indoneisa recently looked at importing cattle from Mexico, but the logistics, sums and practicalities just don’t add up, he said, nor does it work from South America. “Even if you got the cattle for free the sums just don’t add up”.

As grain-fed production reduces, grass fed cattle will have to provide a much greater share of domestic and export demand.

“Northern Australian pastoralists will become a major accidental beneficiary of the new world order,” he predicted.

“Get prepared to play your vital role as efficient beef producers during the coming global chaos.

“Reduce your dependence on foreign inputs–especially fuel and veterinary chemicals – and switch to locally produced products.” (But he also added that some locally produced animal health products still relied on imported ingredients).

“The world will need you to produce their beef when demand for food far exceeds supply.”

However, as a word of warning, work was still required to take advantages of these opportunities, and benefits would not just “fall in to their lap”.

Producers also needed to fight harder collectively against unnecessary Government red tape ro reduce compliance costs and demonstrate there were better solutions available, because ultimately they  were at the end of the chain and the ones who bore the brunt of all additional costs imposed on industry.

More engagement with Australia’s important foreign customers was also vital – Dr Ainsworth who lives in Indonesia said he believed the Australian industry as a whole was badly neglecting some of these critical relationships, something that needed to be fixed as soon as COVID allows more travel,

Dr Ainsworth told Beef Central that the scenarios he laid out are based on statistics all drawn from credible international sources such as the US Federal Reserve and the World Bank.

“Sadly I think somewhere between the good scenario and the bad scenario is likely, but remarkably for the grassfed beef in the north of Australia, when you think about it there are probably very, very few industries on earth that would be in better shape.”

“Certainly a grain producer would be looking pretty good, but he has got to get fuel from somewhere.

“The South Americans are going to have all sorts of logistic issues getting to and from and other things, so with Australia being so close to Asia it gives us a really big advantage.

“There’s a few risks, but generally they are a potentially significant winner.”