While the majority of income for properties in north Australia
continues to be derived from the sale of slaughter and store cattle, many producers are targeting the
expanding live cattle export trade. Until the economic downturn in
mid-1997, the majority of trade was with South East Asia, with
Indonesia the largest buyer. Since then, and with the development
of concerns regarding bovine spongiform encephalopathy (mad cow
disease) in cattle from Europe, new markets for Australian beef
have emerged in North Africa.
 |
|
Brahman cattle, mustered and ready to be
transported to market Photo: Dennis Shulz
|
Growth in live exports to Egypt was the most dramatic,
increasing almost fourfold in 1998-99 to 163 000 head. The
Philippines has now become the largest single market for Australian
live cattle, and exports to South East Asia overall are expected to
continue to rise (ABARE 1999: 105). Nevertheless, the industry
still has some way to go before it reaches pre-1997 export figures
of around 859 000 head. Live cattle exports are forecast to reach
around 664 000 in 1999-2000 (ABARE 1999: 105).
Not all properties in the tropical savannas participate in live
cattle export. There is much regional variation, depending on
access to a suitable port and alternative markets. For example, 30
per cent only of cattle-producing properties in the North East
Queensland region participated in live cattle export in 1996-97,
while 79 per cent of those in the Gulf and 96 per cent in the
Victoria River District were involved.
The implications of the growing trend towards live cattle export
are significant on two fronts. Firstly, this market is far more
vulnerable to fluctuations, as the recent economic crisis in South
East Asia demonstrated. The changing policies of other countries
supplying this market can also have an enormous effect on the
competitiveness of Australian live beef export prices. In essence,
this makes producers who are targeting this market far more
vulnerable, particularly since the live export beast specifications
require different herd management.
Traditionally, properties in northern Australia limited
production to breeding and fattening enterprises with the average
turn-off age (sale) for bullocks at around four to five years
(Smith 1997). However, the live export market requires younger
cattle and the average turn-off age has decreased.
Producers must therefore carry a larger proportion of breeders
to ensure that they have the required numbers of younger cattle to
be turned off each year. However, holding a higher proportion of
breeders makes producers more susceptible to drought and less able
to hold young stock for sale the following year. In addition,
because these properties may no longer hold a variety of steers of
different ages, their capacity to target alternative markets
without a significant adjustment period is limited (ABARE 1998:
62).
Most producers will turn off cattle to various markets each
year. The timing of the decision to sell or buy is determined by
both prices in the market place, and by the condition of the
country. If there has been a poor wet season, producers may decide
to sell some cattle to "stores" to reduce grazing pressure over the
coming dry season. Store cattle are younger cattle that are sold
prior to meeting meatwork specifications and are destined for other
parties to add value to either in feedlots or to properties with
surplus feed.
Live cattle export also fits within this designation since
fattening occurs at the destination. While store breeding is more
likely to be carried out by corporate entities due to their
geographical diversification, most members of the industry tend to
participate. Buying and selling of store cattle is often
opportunistic in that cattle can be disposed of, or acquired,
depending on the favourability of seasonal and market factors.
After a good rainy season, producers may buy stores to be fattened
on their property and resold later.
