Production

What is behind the rise and rise of goat prices?

James Nason, October 29, 2015

While cattle prices have improved significantly this year and lambs continue to deliver solid returns, it is hard to go past rangeland goats as the star performer of the Australian red meat sector in 2015.

Farm-gate prices for goats have almost doubled in the past 12 months to record levels of $5 per kilogram carcase weight.

Rick Gates

Goat Industry Council of Australia president Rick Gates

It is the first time Wilcannia district goat breeder and Goat Industry Council of Australia president Rick Gates can recall having seen rangeland goats sell for higher per kilogram prices than sucker lambs.

The industry is now in the unique position of enjoying stronger demand than it can supply, and is hoping the higher prices will encourage more livestock producers to start farming goats professionally so it can build a stronger supply base.

So what is behind the record prices, and are they likely to last?

The view of one of the industry’s biggest processors and exporters is that prevailing prices can indeed last, because they have been driven by a fundamental increase in demand relative to supply.

Australia is the world’s largest exporter of goat meat, but for many years has relied largely on just one single market, the US, to take most of its product.

The US has effectively been a price-maker, with no other high volume markets to force upwards pressure on Australian goat meat prices.

However that has started to change with new and emerging markets in Asia – in particular Taiwan, Vietnam, Indonesia, Korea and China – now competing with the US for increasingly large volumes of Australian goat meat, fuelling a steady and strong price rise in the past 12 months.

Campbell McPhee, whose company Western Meat Exporters owns Australia’s largest goat processing plant at Charleville, believes demand is only likely to grow as tariff barriers into Korea and China continue to come down under recently secured Free Trade Agreements with those emerging markets.

“These new markets are providing competition to our old existing markets, it is just a perfect storm for a good price increase,” Mr McPhee explained.

“The US is realising that it is not the price maker it used to be and they have got competition from Asia, and India on the sidelines are also starting to put their hands up again.”

Adding to farmgate competition for goats in Australia has been an increase in the number of southern sheep processing plants that are now also processing goats in response to the positive demand outlook.

One group of investors has also announced plans to build a $60 million goat and sheep abattoir at Bourke in western NSW, aiming for construction to commence in the middle of next year.

The increasing demand is putting pressure on goat supply. Mr McPhee says the flow of goats has not been as constant this year compared to previous years.

“I think the goat slaughter figures this year are similar to what we have done in the past, but there are now a lot more processors in the industry,” he said.

“The interesting thing into the future will be where the numbers fall, and if we have gone into the realms of going too far into it and are effecting the natural pool by taking lighter and younger goats than we used to take.”

Goat populations in south western Queensland are also said to showing the effects of increasing predation from wild dogs, as Charleville stock agent Marc McKellar explained in this earlier article.

The obvious challenge for the industry now is whether it can build a supply base to fulfill and sustain the new levels of export demand.

Most goats processed in Australia are rangeland goats opportunistically harvested from sheep and cattle paddocks by landholders and/or private musterers.

Meat & Livestock Australia estimates that there are around four million goats in Australia, but only about 500,000 are in managed herds.

Growing that number from here will hinge on whether landholders have confidence that existing prices are sustainable and will warrant investment in fences to enable them to keep goats in and to keep predators out.

“The price is the factor that will push people into them,” Mr McPhee said.

“Traditionally it was a very fluctuating price, but I think they can be confident going forward that prices are sustainable and they can make an investment into the industry and have a committed program.”

To encourage more producers to breed goats, the Goat Industry Council of Australia and Meat & Livestock Australia have just released a five year strategy to assist goat producers to improve on-farm practices and to make more informed business and herd management decisions.

“The main issue the goat industry has is supply and that is why GICA and MLA have been working on several projects to develop tools and information to assist more people in successfully diversifying into goats as we think that’s where the opportunity lies, particularly in pastoral areas,” MLA Goat Industry Project Manager Julie Petty said.

“Things like a cost of production calculator which incorporates goats, sheep and cattle, establishing trials to determine expected growth rates of young rangeland goats in a variety of locations, reviewing nutrition and depot management guidelines and regular reporting of price and slaughter trends.

“It’s all about getting the right info out to people to help them make a more informed decision which is really exciting, because if you set the enterprise up well, particularly with today’s prices, it can be a lucrative and exciting venture.”

Goat Industry Council of Australia president Rick Gates, who also operates a large goat depot on his property near Wilcannia, says there are increasing signs that more producers are seeing value in managing goats as a livestock enterprise.

“We have seen more producers holding back undersize goats this year to grow them out, and that is a sign that they are seeing that there is money in goats,” he said.

“Normally they will just put them all on a truck and say here, they’re yours”.

He added that one of the ongoing obstacles to goat industry growth is that many livestock producers are very traditional and it can be hard to get them to change.

“But if prices stay there long enough, you would have to be blind not to give it a go,” he said.

The Goatmeat and Livestock Industry Strategic Plan 2020 will act as a guide to how goat meat producer levies in R&D – which generate about $668,000 in producer and matching funding each year – are invested over the next five years.

Asked if he would like to see more cross-breeding of domestic meat goat breeds with rangeland goats, Campbell McPhee said the Australian bush goat was already an ideal goat for the industry’s needs.

“They have a low cost of production and that is why they have an advantage over other stock,” he said.

“Once you start putting $200-$300 Boer goats out there, and wondering if they will come back, your cost of production can shift.

“The local Australian goat has a high vigour, will cover a lot of country, will survive the harsh conditions, and the actual carcases hanging up is what he customer is used to and what the customer wants.”

Links to further goat industry information provided by MLA:

Cost of production: http://www.mla.com.au/Extension-and-training/Tools-and-calculators/Cost-of-production

Growth rates: http://www.mla.com.au/Research-and-development/Search-RD-reports/RD-report-details/Productivity-On-Farm/Trial-design-development-to-determine-expected-growth-rates-of-young-goats/2929

Market reports: http://www.mla.com.au/Prices-markets/Market-reports-prices

Best practice guides: http://www.rangelandgoats.com.au/ and http://www.mla.com.au/Extension-training-and-tools/Going-into-goats

Free webinars: http://www.mla.com.au/Extension-training-and-tools/Going-into-goats

 

 

HAVE YOUR SAY

Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.

Comments

Get Beef Central's news headlines emailed to you -
FREE!