The total volume of beef and veal consumed in Australia’s domestic market is set to increase by 4.4pc this year.
Higher beef production, weaker export markets and stronger demand for beef from consumers within Australia – enticed by lower prices as a result of supermarket price wars – will drive the lift.
Meat and Livestock Australia’s mid-year projections forecast that domestic beef utilisation will total 790,000 tonnes cwt in 2011, 4.4pc higher than last year.
The majority of the rise will occur during the second half of the year when increased cattle supply, coupled with heavier carcases, lifts production.
“It is very difficult to see the higher beef production for the second half of 2011 being accommodated totally by export markets, leaving additional volumes for the Australian market,” MLA’s mid-year projections report stated.
The increased domestic market supply and ongoing competition among retailers is expected to result in further retail price reductions for beef this year, which in turn should drive more purchases of beef.
Retail beef prices during the June quarter 2011 edged up 0.2pc on the March quarter of 2011, but decreased 3.1pc compared with the corresponding quarter in 2010, to average $15.58/kg.
The price falls have followed a surge in cattle prices to all-time highs in early 2011.
Challenges to the outlook include a downturn in consumer confidence mid-way through 2011 based on cost of living pressures and domestic and global economic uncertainty.
ABS turnover data over the first four months of 2011 also pointed to a slowdown in foodservice growth compared with December 2010.
However the retail sector, while also reportedly subdued during this period, recorded higher than average growth in retail food sales.
MLA said the slowdown in foodservice growth suggested consumers had moved down the ‘dining ladder’ and were resisting higher value dishes.
“While sales in restaurants and cafés have been affected by the subdued growth, fast food chains/takeaways turnovers remained relatively firm, benefiting from consumers’ frugal spending behaviour,” the MLA report said.
Australia’s beef utilisation could slow in 2012 as an expected recovery in exports due to higher global beef demand occurs.
MLA also expects rising beef and veal production through to 2015 to lift domestic utilisation between 2010 and 2015 by 11pc.