The Business of Beef: What the latest Australian Beef Report reveals

Michael Wellington, 06/10/2023

“The Business of Beef ” is a regular series produced by the Bush Agribusiness team for Beef Central readers. 


The team at Bush AgriBusiness recently prepared our triannual beef industry financial and productivity reporting as part of the Australian Beef Report 2023.

Michael Wellington

We look forward to conducting this analysis every three years because it helps us understand factors that impact aggregate performance and what determines the differences in performance between regions, markets, and producers. It also gives us a greater understanding of the demographics of the industry we enjoy working in.

The first thing we noticed was the exceptionally strong performance for the three-year period from 2020 to 2022, underpinned by a beef market that has sat mostly in the top decile of prices on a historical basis.

The results from 2020-22 were enough to drag the 12-year average Earnings Before Tax (EBT) into positive territory for family beef businesses in northern Australia, which has not been the case in previous reports. The 12-year EBT for southern Australia remained negative, mainly because the industry is largely comprised of businesses with insufficient operating scale.

Scale is a major issue for much of the industry. In meeting producers at various industry events and workshops, we see the human element of the aggregate financial results we generate. We interact with many producers who are constrained by scale, and who often discover how much this constrains them through their interactions with us. We get no joy from these exchanges and have left many meetings feeling dejected, and sometimes guilty, about having to tell a family that lack of scale will be a major impediment to them achieving their objectives.

These experiences motivated us to explore scale in greater detail in the 2023 Australian Beef Report. We’ve again detailed how and why sufficient scale is necessary, and the steps producers who find themselves owning and/or managing an under-scale business can take to remedy the situation.

Complementing the income flowing from lofty beef prices, capital returns were also very strong in 2020-22. The Rural Bank recently reported that returns on farmland, as a real estate investment, outperformed the S&P 500, ASX200, and residential property over 1, 5, and 20-year periods. While this is the major source of wealth for rural Australia, we’ve previously noted that yield compression makes it difficult to achieve desirable operating returns and justify land acquisition for beef businesses.

In the case of returns on farmland, it may appear that good times really do last forever (for this we have no rational explanation), though we fear the same cannot be said for beef business operating returns.

This masthead recently reported that the EYCI fell below 500c/kg for the first time since January 2020.

We also note that prices of key inputs such as mineral supplements, fertiliser, and fuel have generally been rising above headline inflation.

To top it all off, borrowers are contending with rapidly rising, but historically average, interest rates.

Let’s hope producers used the 2020-22 period to prepare!


Bush Agribusiness

More articles in The Business of Beef series:

How grazing beef businesses boomed in 2022

Can wealth creation be tax deductible?

What rising inflation means for the beef industry

Capital allocation and yield compression








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