how are global and australian beef producers performing? · 2020. 2. 3. · financial performance...

January 2020

How are global and Australian beef producers performing? Global agri benchmark network results 2019

Written by Lucy Anderton (LA. ONE economics & consulting) and Peter Weeks (Weeks Consulting Services) Commissioned by Meat & Livestock Australia

Market InformationMeat & Livestock AustraliaPh: 02 9463 9372Fax: 02 9463 9220Email: [email protected]

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Published by Meat & Livestock Australia Limited ABN 39 081 678 364January 2020© Meat & Livestock Australia Limited 2020

MLA Market Information Report – How are global and Australian beef producers performing?

Page i – Global agri benchmark network results 2019 – BEEF

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ContentsGlobal beef cattle profitability ...........................................1

What is agri benchmark? ....................................................1

Cattle and beef prices ....................................................... 2

Global beef supply ............................................................. 2

Global beef demand and trade ......................................... 4

Changing beef demand regions ....................................... 4

Financial performance of beef cow-calf enterprises...... 6Weaner and cull cow prices .............................................................. 8

How efficient are Australian farms at cow-calf production? ......................................................................... 9

Stocking rate ........................................................................................ 9Weaning rates and total live weight produced per cow .............. 9Total cost of cow-calf production .................................................... 10

In summary, Australian beef cow-calf systems.............. 11

Financial performance of beef cattle finishing enterprises .........................................................................12

How efficient are Australian farms at beef cattle finishing? .................................................................15

In summary, Australian beef finishing enterprises ........17

Appendix: What is agri benchmark? ...............................18

Global agri benchmark network results 2019 – BEEF – Page 1


Global beef1 cattle profitabilityGlobally, beef cattle farms were generally profitable in 2018 (medium-term – covering cash costs and depreciation) due to continuing high cattle prices and stable to lower costs. This was despite the impact of recent or ongoing drought on farm productivity and costs in many major producing countries.

Of the 139 agri benchmark ‘typical’ beef farms (that cover 75% of global beef production), 80% of cow-calf farms and 64% of cattle finishing farms were profitable in 2018 (see Figure 1). All systems were generally profitable – led by pasture-based cow calf and finishing systems. The most notable exceptions were some winter barn cow calf farms and silage finishing farms in Europe and a few drought-affected South African and Namibian farms.

Figure 1: Medium-term profits agri benchmark farms 2018

Source: agri benchmark

Cow-calf (breeding)

-200

-100

0

100

200

300

400

500

600profit (positive) profit (Australian farms)US$/100kg cwt


Cattle finishing

-400

-200

-100

0

100

200

300

400US$/100kg cwt

-300

profit (negative)

OUTDOOR WINTER BARN

PASTURE SYSTEMS

GRAIN-FINISHING

SILAGE SYSTEMS

CU

T &

CA

RRY

profit (positive) profit (Australian farms)profit (negative)

What is agri benchmark?agri benchmark is a global, non-profit and non-political network of agricultural experts dedicated to lifting the productivity and viability of agricultural production across the globe through benchmarking farm performance. It is coordinated by the Thünen Institute – the German government rural research body – and has branches covering beef cattle, sheep, dairy, pigs, cash crops, horticulture, organic farming and fish. The attle network currently has 34 member countries – covering over 75% of global beef production.

If you are unfamiliar with agri benchmark, please read the appendix to this report (page 18).

1 This report presents the agri benchmark network’s perspectives on recent global beef developments, the economics and drivers facing producers around the world, farm profitability (globally and in network countries) and views on likely future developments and challenges. It then asks the question how competitive are Australian beef producers and what are the main areas where our productivity differs from other countries? The analysis and perspectives are as of mid-2019, though farm data is for the 2018 year.

Global agri benchmark network results 2019 – BEEF


0

50

100

150

200

250Price indices (2002-2004 = 100)

Bovine meat Poultry meat Pig meat Ovine meat

Source: FAO Food Indices

1996

1998

20002002

20042006

20082010

20122014

202019

9019

9219

942018

2016

Cattle and beef pricesGlobal cattle and beef prices remained stable and high in 2018, as global supply growth struggled to keep up with the ongoing lift in demand, especially in major beef importing countries (led by China). Assisting these stable cattle and beef prices was the largely unchanged exchange rates against the USD in 2018 (but all still down against the USD since 2014). The main exception was further major falls in the currencies of Argentina, Brazil and Iran.

These stable and high prices are reflected in the FAO Beef Price Index which was unchanged in 2018 (see Figure 2) – only 12% below the extraordinary peak in 2014 and still more than double the level in the early 2000s, before the lift began. In contrast to beef and sheepmeat, global poultry and pork prices have fallen appreciably from their respective peaks in the past five years, on the back of increased supplies and slower demand (and import) growth.

The new agri benchmark Global Cattle Price Index2 was also high and stable in 2018, similar to the FAO Export Beef Price Index (see Figure 3). The agri benchmark Cattle Index represents average on-farm finished cattle prices collected by agri benchmark from all member countries, weighted using country production to yield a global price index.

Global beef supplyGlobal beef supply growth has slowed in the last 10 years (see Figure 4), with notable falls in Europe, Canada, Argentina and Australia and no change in the US. Even growth in major emerging country producers and suppliers, such as China, Brazil, Mexico and Uruguay, was slower than in previous decades.

Figure 4 Beef production growth (last five decades)

-10

-5

-0

-5

10

Wor

ld US

Braz

il

Aus

tralia

Arg

entin

a

Can

ada

Mex

ico

UK

Fran

ce

Ger

man

y

Sout

h A

frica

Annu

al p

erce

ntag

e gr

owth

rate

(%)

Source: Calculations based on FAOStat 09.2019

15

20

1988-1997 1998-2007 2008-20171968-1977 1978-1987

Chi

na

Figure 2: FAO Global Meat Price Indicies (based on USD prices)

0

50

100

150

200

250Price indices (2002-2004 = 100)

Agri benchmark Finished cattle price index FAO Bovine meat price index

Source: agri benchmark Cattle Price Index, FAO Meat Price Indices

20072009

1997

20002004

20062008

20102012

201419

982002

20052018

20162011

20132015

20172001

1999

2003

Figure 3: agri benchmark Global Cattle Price Index and FAO Export Beef Price Indices

2 agri benchmark has recently launched global price indices for finished cattle, lambs, and a combined lambs and sheep index for sheepmeat. These represent average on-farm livestock prices collected by agri benchmark from all member countries, weighted using country production to produce global price indices. A short index description is available on the agri benchmark website at http://www.agribenchmark.org/agri-benchmark/news-and-results.html



The explanation appears to lie principally in land, feed and environmental constraints, made worse by climate change. The rise in cattle and beef prices over the last 10-15 years has not yet had an appreciable impact on global beef supplies, as expansion in the US appears to have been offset by falls or slowing growth elsewhere.

Land constraints and increased environmental restrictions appear to be of increasing importance, both directly through beef herds and through the higher cost of grain (since the early 2000s). Recent severe droughts have played a role in slowing beef supply growth – especially in Australia, South America, Europe (Germany, Austria, France, Ireland and Spain), Africa (notably South Africa and Namibia), western Canada, Mexico and Iran (see Figure 5).

Common Agricultural Policy reforms are also still impacting production of both dairy products and beef in the EU, while FMD outbreaks are further affecting supply in South Africa and Namibia.

Figure 5: World drought map May 2018

Source: Government of Spain, July 2018 Saniago Begueri,a Borja Latorre, Fergus Reig, Serio M.Vicente-Serrano, Peter Carter Climate Change-FoodSecurity.org

Africa



3 OECD-FAO, Agricultural Outlook 2019-2028, July

Global beef demand and tradeGlobal demand for beef has lifted to a new level this decade following the rapid growth in consumption and imports in China and parts of South East Asia. Despite some beef supply response from the US and South America, beef production growth has been unable to exceed ongoing demand growth in recent years – hence, beef prices are holding close to the records reached in 2014. Global beef demand & trade

Global demand for beef has lifted to a new level this decade following the rapid growth in consumption and imports in China and parts of South East Asia. Despite some beef supply response from the US and South America, beef production growth has been unable to exceed ongoing demand growth in recent years – hence, beef prices are holding close to the records reached in 2014.

Changing beef demand regionsThe OECD-FAO in the 2019 Agricultural Outlook 2019-20283, characterised the current era of changing beef demand as consisting of three distinct regional components:

Emerging economies (led by China): with increased demand for beef driven by a combination of income growth, urbanisation and westernisation – leading to rising per person beef consumption (from a low base)

Advanced economies (led by the US and the EU): with beef ‘saturation’ and changing consumption patterns – in part, resulting from a steadily increasing health, environmental and sustainability awareness – leading to stagnant or declining per person beef consumption (from a high base)

Sub-Sahara Africa: with a slow increase in beef demand driven by population growth, but constrained by low incomes and a resulting on-going reliance on staple foods (cereals, roots & tubers, pulses) – leading to declining per person beef consumption (from a low base).

One reoccurring theme of the agri benchmark Conference 2019 was the impacts of China’s demand for imported beef – from minimal trade just a decade ago to the world’s largest beef importer (see Figure 6). This has caused a surge in beef trade and some diversion of beef products from traditional markets (especially South American beef from their domestic markets, the Middle East and Russia) to China by major exporting countries – especially lower-quality cuts such as manufacturing beef, brisket, shin/shank, blade and flap/knuckle. This is especially the case for Australia, New Zealand, Canada and the big three South American suppliers (Brazil, Argentina and Uruguay), which have all been granted ‘official’ import access to China. At the same time, China has reduced the large grey channel trades of India buffalo beef and US beef ( mainly via Vietnam and Hong Kong).

0

1

2

4

6

7million tonnes cwt

Source: USDA2007

20092000

20022004

20062008

20102012

20142001

20032005

2019e2016

20112013

20152017

3

5

China & Hong Kong US Japan South Korea Russia

2018

e: 2019 estimate as at January 2020

Figure 6 Top five beef importing countries

United States



The rapid emergence of China as the leading beef importer are a major source of both optimism and uncertainty as to global beef prospects, trade and prices. As China’s economic growth slows there are some observers, notably the OECD-FAO, that suggest its beef import growth will slow in the coming decade and will be outstripped by growth in the South East Asian and MENA markets.

Market liberalisation has been a major driver expanding global beef trade over the past 30 years (commencing with South Korea and Japan in the late 1980s and the GATT Uruguay Round Multilateral Trade Agreement in April 1994). However, there is now a high risk that the world will slip back into farm subsidisation and protectionism, led by the USA and Europe. This has been evident since the failure of the Doha Round of World Trade Organisation (WTO) multilateral trade talks in 2008, which led to a plethora of bilateral agreements. The key components of this trade risk highlighted at the 2019 agri benchmark Conference were again the China-US trade (and currency) war and Brexit.

Another major demand risk highlighted at the 2019 Conference was the threat from plant-based protein substitutes to traditional beef products, particularly mince products such as hamburgers. A number of plant-based hamburgers have been successfully launched in the US market in 2019 led by Burger King and McDonalds (see Figure 7), with some now available in Australian supermarkets and restaurants.

Figure 7: Plant-based burgers

Plant Lettuce Tomato Burger (P.L.T.)McDonalds

Impossible WhopperBurger King

Beyond MeatColes

Source: https://www.engadget.com/2019/09/26/mcdonalds-beyond-meat-burgers-test/; https://impossiblefoods.com/ and https://www.beyondmeat.com/products/the-beyond-burger/

Brazil



Financial performance of beef cow-calf enterprisesThe year 2018 proved to be relatively successful for most of the 72 ‘typical’ agri benchmark cow calf farms across 29 countries. Short-term profitability was achieved by 65 farms and across most countries, except a few in Spain (ES), Ukraine (UA), Russia (RU), Mexico (MX) and Namibia (NA), and one of the three farms in the United Kingdom (UK) – Figure 84.

Most farms achieved short-term profitability, except eight which meant they did not generate enough surplus income to cover their main enterprise and operational costs, including interest (for example Spain (ES) and Uruguay (UA)). A further nine of the remaining 65 farms did not achieve medium term profitability, so their surplus was not enough to cover depreciation, this means replacing machinery or infrastructure is difficult, but they could cover their main enterprise and operational costs, including interest (for example, Austrian (AT) farms were in this situation). Leaving 55 achieving enough surplus to enable them to replace infrastructure and machinery.

Figure 8: Profitability of cow-calf enterprise

Source: agri benchmark-500

-350

-250

-200

-150

-100

-50

0

50

100

150

200

250

-400

-300

-450

Austr

ia-3

0-25

Germ

any-

100-

0

Fran

ce80

A-70

Fran

ce-8

5-0

Spain

-0-8

0Sp

ain-18

0-55

0

UK_7

0_45

UK_1

00_8

0

Irelan

d-35

-30

Irelan

d-85

-200

Ukra

ine-

410-

275

Russ

ia-45

0-0

Cana

da-2

00A-

0Ca

nada

-200

B-0

Cana

da-8

00B-

0Ca

nada

-800

A-0

US-16

0-0

US-2

40-0

US-6

00-0

Mex

ico-12

0-0

Arge

ntin

a-80

0-63

0Ar

gent

ina-

850-

380

Arge

ntin

a-110

0A-8

00Ar

gent

ina-

1100B

-0

Urag

uay-

115-0

Urug

uay-

150-

0Ur

ugau

y-22

0-12

0

Braz

il-130

-35

Braz

il-170

-60

Braz

il-400

-0Br

azil-6

00-2

40Br

azil-6

70-0

Braz

il-250

0-0

Colu

mbi

a-22

0-35

0Co

lum

bia-

400-

130

Colu

mbi

a-110

0-0

Para

guay

-1550

-450

Chin

a-2-

0Ch

ina-

140-

70

Indo

nesia

-2-1

Indo

nesia

-3-0

Indo

nesia

-4-2

NSW

-180-

65NS

W-2

00-8

0VI

C-35

0-15

0NS

W-5

00-4

50Q

LD-5

20-3

10Q

LD-9

00-2

80Q

LD-2

300-

750

QLD

-270

0-93

0NT

-650

0-17

00

SAfri

ca-2

00-0

SAfri

ca-2

50-0

SAfri

ca-3

50-0

SAfri

ca-4

00-0

Europe North America South America AfricaAsia/Oceania

US$/100kg lwt Short-term: Total returns less cash cost Medium-term: Total returns less cash cost + depreciation Long-term profitability

AUSTRALIA

Generating cash surplus large enough to achieve long-term profitability (which includes covering opportunity cost of land, labour and capital) is often difficult to achieve, and in 2018 only 29 of the 72 farms achieved long-term profitability. However, seven of the nine Australian beef farms achieved this, showing the comparative strength of the Australian beef farming sector in 2018 relative to other farms around the globe, notably in Brazil and the US (key competitors which were not able to achieve long-term profitability).

Canada, Argentina, Uruguay, and Indonesia and the two Irish farms and one from Sweden achieved long-term profitability, although the European farms achieved this through government payments.

Figure 9 shows the difference between whole-farm returns and market returns indicating the difference between income received from cattle enterprise sales and total income, which includes returns from the sale of other commodities (e.g. crops, lambs, sheep or wool) and government decoupled and coupled payments. If the market returns are above the bar, this means the farms achieved a surplus and therefore medium-term profitability (opportunity costs are not included in this graph).

4 This is a shorter version of the data set, displaying 57 farms. Switzerland (CH), Sweden (SE), Poland (PL), Czech (CZ), Kazakhstan (KZ), Namibia (NA) and Botswana (BW) are not included as they do not directly compare with any Australian farms.



Figure 9: Whole farm enterprise costs and returns5


0

500

1,000

1,500

2,000

2,500

3,000

AUSTRALIA

Short-term: Total returns less cash cost Medium-term: Total returns less cash cost + depreciation Long-term profitability

Aus

tria-

30-2

5

Ger

man

y-10

0-0

Fran

ce80

A-7

0Fr

ance

-85-

0

Spai

n-0-

80Sp

ain-

180-

550

UK_

70_4

5U

K_10

0_80

Irela

nd-3

5-30

Irela

nd-8

5-20

0

Ukr

aine

-410

-275

Russ

ia-4

50-0

Can

ada-

200A

-0C

anad

a-20

0B-0

Can

ada-

800B

-0C

anad

a -8

00A

-0

US-

160-

0U

S-24

0-0

US-

600-

0

Mex

ico-

120-

0

Arg

entin

a-80

0-63

0A

rgen

tina-

850-

380

Arg

entin

a-11

00A

-800

Arg

entin

a-11

00B

-0

Ura

guay

-115

-0U

rugu

ay-1

50-0

Uru

gauy

-220

-12 0

Bra

zil-1

30-3

5B

razi

l-170

-60

Bra

zil-4

00-0

Bra

zil-6

00-2

40B

razi

l-670

-0B

razi

l-250

0-0

Col

umbi

a-22

0-35

0C

olum

bia-

400-

130

Col

umbi

a-11

00-0

Para

guay

-155

0-45

0

Chi

na-2

-0C

hina

-140

-70

Indo

nesi

a-2-

1In

done

sia-

3-0

Indo

nesi

a-4-

2

NSW

-180

-65

NSW

-200

-80

VIC

-350

-150

NSW

-500

-450

QLD

-520

-310

QLD

-900

-280

QLD

-230

0-75

0Q

LD-2

700-

930

NT-

6500

-170

0

SAfri

ca-2

00-0

SAfri

ca-2

50-0

SAfri

ca-3

50-0

SAfri

ca-4

00-0

Profit

US$/100kg lwt

Global beef farms are reliant on income from beef production, either from the cow calf enterprise, beef finishing enterprise or a combination of the two (as are all the typical Australian farms). While many cow-calf enterprises have alternative enterprises within their business, they mostly rely on their income from beef. The exception to this is one dairy farm and 8 cash-crop farms. Of the 72 farms, 39 have a beef finishing enterprise, 20 farms have cash crops, 3 have a dairy enterprise, 5 have sheep and 8 have alternative enterprises like manure or forestry. There are 20 farms which rely solely on the cow calf enterprise for income – Figure 10.

Australian beef farms are specialised businesses, concentrating on beef production with a finishing system to compliment the cow calf enterprise. Like most cow calf enterprises around the world, all nine farms are pasture-based production systems. The Australian farms are classed as out-door, which is defined as ‘no barns, sometimes cover or shed, grazing plus hay (plus silage) outside, sometimes very low stocking rates’. For example, NT-6500-1700 located in the Northern Territory has very low stocking rates.

Figure 10: Income structure including government payments (%)

AUSTRALIASource: agri benchmark

0

10

20

30

40

50

60

70

80

90

100

Aus

tria-

30-2

5

Ger

man

y-10

0-0

Fran

ce80

A-7

0Fr

ance

-85-

0

Spai

n-0-

80Sp

ain-

180-

550

UK_

70_4

5U

K_10

0_80

Irela

nd-3

5-30

Irela

nd-8

5-20

0

Ukr

aine

-410

-275

Russ

ia-4

50-0

Can

ada-

200A

-0C

anad

a-20

0B-0

Can

ada-

800B

-0C

anad

a -8

00A

-0

US-

160-

0U

S-24

0-0

US-

600-

0

Mex

ico-

120-

0

Arg

entin

a-80

0-63

0A

rgen

tina-

850-

380

Arg

entin

a-11

00A

-800

Arg

entin

a-11

00B

-0

Ura

guay

-115

-0U

rugu

ay-1

50-0

Uru

gauy

-220

-12 0

Bra

zil-1

30-3

5B

razi

l-170

-60

Bra

zil-4

00-0

Bra

zil-6

00-2

40B

razi

l-670

-0B

razi

l-250

0-0

Col

umbi

a-22

0-35

0C

olum

bia-

400-

130

Col

umbi

a-11

00-0

Para

guay

-155

0-45

0

Chi

na-2

-0C

hina

-140

-70

Indo

nesi

a-2-

1In

done

sia-

3-0

Indo

nesi

a-4-

2

NSW

-180

-65

NSW

-200

-80

VIC

-350

-150

NSW

-500

-450

QLD

-520

-310

QLD

-900

-280

QLD

-230

0-75

0Q

LD-2

700-

930

NT-

6500

-170

0

SAfri

ca-2

00-0

Safri

ca-2

50-0

Safri

ca-3

50-0

Safri

ca-4

00-0

Cow calf Beef finishing Cash crops Dairy Other farm enterprises (forestry, manure, etc.)

Sheep (lambs) Other farm enterprises (forestry, manure, etc.)Percentage (%)

5 Figure 9 displays 55 farms. Switzerland (CH), Sweden (SE), Poland (PL), Czech (CZ), Kazakhstan (KZ), Namibia (NA) and Botswana (BW) are not included in this graph as they do not directly compare with Australian farms. DE-1400_800 and UA_295_5600 are also omitted as they are a high ‘outliers’ making it difficult to discern results for the other farms.



Figure 11 demonstrates the reliance of the cow calf enterprise on weaner sales. Cull animal receipts are an important secondary income stream for countries selling breeding stock and government payments also contribute to income in Europe.

Figure 11: Percentage composition of the total returns from the cow calf enterprise

0

10

20

30

40

50

60

70

80

90

100

Aus

tria-

30-2

5

Ger

man

y-10

0-0

Fran

ce80

A-7

0Fr

ance

-85-

0

Spai

n-0-

80Sp

ain-

180-

550

UK_

70_4

5U

K_10

0_80

Irela

nd-3

5-30

Irela

nd-8

5-20

0

Ukr

aine

-410

-275

Russ

ia-4

50-0

Can

ada-

200A

-0C

anad

a-20

0B-0

Can

ada-

800B

-0C

anad

a -8

00A

-0

US-

160-

0U

S-24

0-0

US-

600-

0

Mex

ico-

120-

0

Arg

entin

a-80

0-63

0A

rgen

tina-

850-

380

Arg

entin

a-11

00A

-800

Arg

entin

a-11

00B

-0

Ura

guay

-115

-0U

rugu

ay-1

50-0

Uru

gauy

-220

-120

Bra

zil-1

30-3

5B

razi

l-170

-60

Bra

zil-4

00-0

Bra

zil-6

00-2

40B

razi

l-670

-0B

razi

l-250

0-0

Col

umbi

a-22

0-35

0C

olum

bia-

400-

130

Col

umbi

a-11

00-0

Para

guay

-155

0-45

0

Chi

na-2

-0C

hina

-140

-70

Indo

nesi

a-2-

1In

done

sia-

3-0

Indo

nesi

a-4-

2

NSW

-180

-65

NSW

-200

-80

VIC

-350

-150

NSW

-500

-450

QLD

-520

-310

QLD

-900

-280

QLD

-230

0-75

0Q

LD-2

700-

930

NT-

6500

-170

0

SAfri

ca-2

00-0

Safri

ca-2

50-0

Safri

ca-3

50-0

Safri

ca-4

00-0

Percentage (%)

Cull animals and slaughter receipts Breeding livestock receipts Weaner and transfer to beef receipts Government payments Other returns


Weaner and cull cow pricesThe average price for weaners, at US262/100kg live weight (lwt), was also the median price. Prices ranged from US$60/100kg lwt to US$792/100kg lwt. Weaner prices for Australian farms were in the 50th percentile, except QLD-2300_750 which was in the bottom 20% (Figure 12), while Vic-350_150 and NSW-180_65 were in the 75th percentile. Figure 12 illustrates the countries which received prices in the top 20%, typically in North America, except Mexico, and parts of Europe, and the bottom 20% of prices, mostly in parts of South America and South Africa.

Figure 12: Weaner prices

Source: agri benchmarkAUSTRALIA


0

100

200

300

400

500

600

700

Aus

tria-

30-2

5

Ger

man

y-10

0-0

Fran

ce80

A-7

0Fr

ance

-85-

0

Spai

n-0-

80Sp

ain-

180-

550

UK_

70_4

5U

K_10

0_80

Irela

nd-3

5-30

Irela

nd-8

5-20

0

Ukr

aine

-410

-275

Russ

ia-4

50-0

Can

ada-

200A

-0C

anad

a-20

0B-0

Can

ada-

800B

-0C

anad

a -8

00A

-0

US-

160-

0U

S-24

0-0

US-

600-

0

Mex

ico-

120

-0

Arg

entin

a-80

0-63

0A

rgen

tina-

850-

380

Arg

entin

a-11

00A

-800

Arg

entin

a-11

00B

-0

Ura

guay

-115-

0U

rugu

ay-15

0-0

Uru

gauy

-220

-120

Braz

il-13

0-35

Braz

il-17

0-6

0Br

azil-

400-

0Br

azil-

600-

240

Braz

il-67

0-0

Braz

il-25

00-0

Col

umbi

a-22

0-35

0C

olum

bia-

400-

130

Col

umbi

a-11

00-0

Para

guay

-1550

-450

Chi

na-2

-0C

hina

-140-

70

Indo

nesi

a-2-

1In

done

sia-

3-0

Indo

nesi

a-4-

2

NSW

-180-

65N

SW-2

00-8

0V

IC-3

50-15

0N

SW-5

00-4

50Q

LD-5

20-3

10Q

LD-9

00-2

80Q

LD-2

300-

750

QLD

-270

0-93

0N

T-65

00-17

00

SAfri

ca-2

00-0

Safri

ca-2

50-0

Safri

ca-3

50-0

Safri

ca-4

00-0

US$/100 kg lwt Top 20% The rest Bottom 20%



Figure 13: Range in weaner prices6


0

5

10

15

20

25

30

35Weaner pricesUS$/100kg lwt

(60,160) (160,260) (260,360) (360,460) (460,560) (560,591) (>591)0

5

10

15

20

25

30

40Cull cow pricesUS$/kg lwt

(0.72,1.58) (1.58,2.43) (2.43,3.29) (3.29,4.14) (4.14,5.00) (>5.00)

35

The average cull cow price was US$1.84/kg lwt and the median price was US$1.50/kg lwt, ranging from US$9.11 on one farm in Switzerland to US$0.76 in Columbia, but range in price within countries and farms was not large (Figure 13). Australian farms averaged US$1.7/kg lwt, ranging from US$1.4 to US$2.0, and were generally close to the median. NSW-200_80, QLD-520_310 and QLD-2700_930 all received cull cow prices in the 75th percentile and more than US$1.9/kg lwt.

How efficient are Australian farms at cow-calf production?The key physical performance indicators for the cow calf enterprise are stocking rates, weaning rates and total liveweight produced per cow. On the financial side, weaner prices and cost of production have a key influence on enterprise profitability.

Stocking rateNorthern Australian cow-calf systems have relatively low stocking rates, on a par with similar rangelands in Montana and Kansas (US), Alberta (Canada), and semi-Kalahari bosveld (South Africa). However, southern Australia’s higher rainfall systems maintain high stocking rates and land productivity, similar to European and the more intensive South American systems.

Weaning rates and total live weight produced per cowThe average weaning rates (calving percentage minus calf mortality) per 100 cows is 81%. Most countries achieve weaning rates above 79%, but there are a few with very low reproductive and weaning rates – Figure 14. For example, AU-6500-1700 located in the rangelands of the Northern Territory has the lowest weaning rate. Other systems, with similar rates and extensive cattle production, are found in South America (Brazil, Columbia, Paraguay, Uruguay) and Africa.

United Kingdom

6 Weaners going to finishing



Figure 14: Total live weight sold per cow (kg) and weaning % for calves


kg/cow lat

0

20

40

60

80

100

120

50

100

150

200

250

300

350

400

450

NT-

6500

-170

0In

done

sia-

3-0

Indo

nesi

a-4-

2Br

azil-

2500

-0C

olum

bia-

220-

350

Uru

guay

-150

-0Br

azil-

670-

0Br

azil-

400-

0U

ruga

uy-2

20-1

20In

done

sia-

2-1

Mex

ico-

120-

0Pa

ragu

ay-1

550-

450

Braz

il-13

0-35

Col

umbi

a-11

00-0

Col

umbi

a-40

0-13

0A

rgen

tina-

1100

B-0

Braz

il-17

0-60

Arg

entin

a-11

00A

-800

Russ

ia-4

50-0

QLD

-900

-280

Arg

entin

a-85

0-38

0U

ragu

ay-1

15-0

SAfri

ca-2

00-0

QLD

-230

0-75

0A

rgen

tina-

800-

630

QLD

-520

-310

Can

ada-

800B

-0Sp

ain-

0-80

Braz

il-60

0-24

0Sp

ain-

180-

550

Safri

ca-3

50-0

Can

ada

-800

A-0

Chi

na-1

40-7

0C

anad

a-20

0A-0

Ukr

aine

-410

-275

QLD

-270

0-93

0Sa

frica

-250

-0N

SW-2

00-8

0V

IC-3

50-1

50U

ragu

ay-2

95-5

600

Safri

ca-4

00-0

Can

ada-

200B

-0U

S-60

0-0

US-

160-

0U

S-24

0-0

Irela

nd-3

5-30

Ger

man

y-14

00-8

00U

K_70

_45

NSW

-500

-450

Chi

na-2

-0Fr

ance

80A

-70

UK_

100_

80G

erm

any-

100-

0N

SW-1

80-6

5Fr

ance

-85-

0Ire

land

-85-

200

Aus

tria-

30-2

5

Weaning calves per 100 cows and year

Cull and slaughter animals Breeding animals Calves sold/going to finishing Adult cattle sold/going to finishing Weaned calves per 100 cows and year (RHS)

0

AUSTRALIA

There is a moderately strong correlation between total livestock produced per cow and weaning rates. Figure 14 shows that the countries producing more than 250kg lwt per cow are more likely to have a weaning rate above 80%. This demonstrates the importance of weaning rate to the cow-calf enterprise productivity, and provides an area of management where countries or regions with low weaning rates – for example, the region where AU_6500_1700 – could improve productivity and profitability. However, this remains challenging for extensive systems with poor pasture bases and harsh climatic conditions.

Nutrition, genetic capacity, reproductive rates, mature size of breed, generation interval, growth rates and turn-off weights drive weaning percentage rates and total live weight produced per cow.

The Australian farms with the lower total liveweight sold and weaning rates (Figure 14) are located in rangeland type country and run Bos Indicus breeds or Bos Indicus/British Breed cross cattle, such as the Droughtmaster, and are generally performing as well or better than other countries, such as Brazil, Columbia and Africa, using similar breeds.

Total cost of cow-calf productionAustralia’s competitive advantage in the cow calf production sector in 2018 was its low cost of production. The Australian farms cost of production (Figure 15) was very similar to many of the traditionally low cost of production countries in South America, like Argentina (AR), Brazil (BR) and Columbia (CO). Interestingly, the opportunity cost for land is higher in Brazil than Australia, averaging 84 and 46 US$/100kg lwt respectively and contributing to Australian farms achieving long-term profitability.

Australia farms’ cost of production was lower than the US for all costs and generally lower than the Canadian (CA) farms – Table 1 and Figure 15.7

Table 1: Average (range) costs of selected farms compared to all cow-calf farms US$/100kg lwt

All farms Australia Brazil Argentina Canada US

Total cost of cow-calf enterprise

334 (81 -2,269) 162 (100-217) 237 (134-294) 160 (107-253) 249 (194-333) 349 (326-379)

Non-factor costs 164 (9 – 1176) 75 (39-103) 72 (49-102) 66 (50-100) 110 (77-147) 172 (163-187)

Total labour costs 82 (3-809) 25 (11-39) 37 (14-59) 24 (18-35) 60 (30-118) 41 (56-28)

Total land costs 59 (0-214) 46 (16-71) 84 (38-111) 59 (30-99) 57 (38-93) 111 (102-129)

Total capital costs 29 (0-230) 16 (0-31) 45 (23-63) 11 (6-20) 21 (16-29) 24 (7-33)


7 A shortened data set showing selected farms from all countries.



Australians labour costs (US$/100kg lwt) were also generally lower than, or similar to, the selected farms in Table 1. This was despite having the highest labour cost per hour, except Sweden8, at an average of US$21/hour for paid labour and a US$23/hour opportunity cost for family labour, the same as 2017. However, Australia’s labour productivity or labour cost per 100kg lwt beef produced, is better than, or as good as, many countries, including in Africa where labour costs $/hour are very low at US$1-3/hour.

Figure 15: Total cost of the cow-calf enterprise

Source: agri benchmarkAUSTRALIA


0

100

200

300

400

500

600

800

Aus

tria-

30-2

5

Ger

man

y-10

0-0

Fran

ce80

A-7

0Fr

ance

-85-

0

Spai

n-0-

80Sp

ain-

180-

550

UK_

70_4

5U

K_10

0_80

Irela

nd-3

5-30

Irela

nd-8

5-20

0

Ukr

aine

-410

-275

Russ

ia-4

50-0

Can

ada-

200A

-0C

anad

a-20

0B-0

Can

ada-

800B

-0C

anad

a -8

00A

-0

US-

160-

0U

S-24

0-0

US-

600-

0

Mex

ico-

120

-0

Arg

entin

a-80

0-63

0A

rgen

tina-

850-

380

Arg

entin

a-11

00A

-800

Arg

entin

a-11

00B

-0

Ura

guay

-115-

0U

rugu

ay-15

0-0

Uru

gauy

-220

-120

Braz

il-13

0-35

Braz

il-17

0-6

0Br

azil-

400-

0Br

azil-

600-

240

Braz

il-67

0-0

Braz

il-25

00-0

Col

umbi

a-22

0-35

0C

olum

bia-

400-

130

Col

umbi

a-11

00-0

Para

guay

-1550

-450

Chi

na-2

-0C

hina

-140-

70

Indo

nesi

a-2-

1In

done

sia-

3-0

Indo

nesi

a-4-

2

NSW

-180-

65N

SW-2

00-8

0V

IC-3

50-15

0N

SW-5

00-4

50Q

LD-5

20-3

10Q

LD-9

00-2

80Q

LD-2

300-

750

QLD

-270

0-93

0N

T-65

00-17

00

SAfri

ca-2

00-0

Safri

ca-2

50-0

Safri

ca-3

50-0

Safri

ca-4

00-0

US$/100 kg lwt

700

Non-factor costs Total labour cost Total land cost Total capitol cost

In summary, Australian beef cow-calf systemsThe cow-calf component of Australian beef cattle farms are internationally competitive compared to their main export competitors from North and South America. Australian cow-calf enterprises have relatively low cost of production, economies of scale, high labour productivity (kg LW produced per hour of labour input) and the ability to achieve long-term profitability, assisted by lower opportunity costs.

There are opportunities for Australian farms to improve their productivity, especially in the more extensive systems, by improving weaning percentages. However, this is difficult in systems with poor pasture production and challenging climatic conditions, and unlikely to occur in the short-term future as dry conditions persist in many parts of Australia creating difficulties for pasture growth and animal management.

Australia

8 Sweden labour cost per hour is US$25.



China

Financial performance of beef cattle finishing enterprisesThere was a deterioration in financial performance for beef finishing enterprises in 2018 compared to 2017 – only 64% of farms achieved short-term (cash) profits, when in 2017 nearly all achieved this, and only 58% achieved medium-term profits (covering cash costs and depreciation), 12% less than 2017. However, more farms achieved long-term profitability (covering the opportunity cost of land and family labour) than in 2017, 26% compared to less than 20%.

Figure 16: Short- medium- and long-term profitability for beef finishing enterprises9

Source: agri benchmark-650

-350

-200

0

150

300

350

-500


US$/100kg lwt Short-term: Total returns less cash cost Medium-term: Total returns less cash cost + depreciation Long-term profitability

AUSTRALIA

-300

-150

-450

-250

-50

-550

-400

100

250

50

200

-600

-100

Austr

ia _3

0_25

Austr

ia_0_

175T

Germ

any_

0_26

0Ge

rman

y_0_

285

Germ

any_

0_38

0Ge

rman

y_0_

525T

Germ

any_

1400

_800

Fran

ce_8

0A_7

0Fr

ance

_0_2

00

Spain

_0_4

00Sp

ain_0

_700

0Ita

ly_0_

910

UK_7

0_45

UK_1

00_8

0UK

_0_9

0UK

_0_7

50Ire

land_

0_40

Irelan

d_85

_200

T

Ukra

ine-

410-

275

Russ

ia_0_

640

Cana

da_0

_150

0Ca

nada

_0_2

8KUS

_0_7

200

US_0

_75K

Mex

ico_0

_102

0M

exico

_0_1

500

Arge

ntin

a_0_

900

Arge

ntin

a_0_

1450

Arge

ntin

a_0_

26K

Urug

uay_

220_

120

Braz

il_13

0_35

Braz

il_17

0_60

Braz

il_60

0_24

0Br

azil_

0_30

0Br

azil_

0_17

50Br

azil_

0_50

00 Colu

mbi

a_40

0_13

0Co

lum

bia_

0_16

0Co

lum

bia_

0_80

0Pe

ru_0

_170

0

Para

guay

_0_1

400

Chin

a_14

0_70

Chin

a_0_

150

Chin

a_0_

300

Chin

a_0_

940

Chin

a_0_

2000

Indo

nesia

_4_2

Indo

nesia

_0_4

Indo

nesia

_0_1

00

Kaza

ksta

n_50

0_80

0

NSW

-180-

65NS

W-2

00-8

0VI

C-35

0-15

0Q

LD_9

00_2

80Q

LD-5

20-3

10NS

W-5

00-4

50Q

LD-2

300-

750

QLD

-270

0-93

0NT

-650

0-17

00AU

_0_2

7KM

alays

ia_0

_2M

alays

ia_0

_14

Mala

ysia

_0_3

6M

alays

ia_0

_280

Tuni

sia_0

_45

SAfri

ca_0

_300

0SA

frica

__75

KNa

mib

ia_0_

600

Nam

ibia_

0_25

K

Outstanding financial performance by the Chinese beef finishing farms is evident, all achieving long-term profitability, unlike most other countries. Only one Australian farm achieved this, which was a specialised feedlot enterprise. Long-term profitability was achieved by the Ukraine in Europe, one US farm and one Mexican farm in North America, and, from South America, one farm each in Argentina, Uruguay and Paraguay and two in Columbia.

The finishing systems in China are either silage or grain-based, and their high level of profitability was driven by high beef prices (US$ per 100kg carcase weight), as shown in Figure 17. This was also assisted with reasonable costs, despite two of the farms in China being in the top quartile for cost of production and the other two farms near the average, which was US$506 per 100kg carcass weight – Figure 18.

9 This is a shorter version of the data, 69 farms instead of 99



Figure 17: Beef prices for 2018


AUSTRALIA

North America South America AfricaAsia/Oceania

0

100

200

300

400

600

800

1,100US$/100 kg cwt Top 25% The rest Bottom 25%

Farm inden�fica�on indicates Country_No.Cows_No.Finished ca�le sold

500

700

900

1,000

Austr

ia _

30_2

5Au

stria

_0_1

75T

Germ

any_

0_26

0Ge

rman

y_0_

285

Germ

any_

0_38

0Ge

rman

y_0_

525T

Germ

any_

1400

_800

Fran

ce_8

0A_7

0Fr

ance

_0_2

00

Spain

_0_4

00Sp

ain_0

_700

0

Italy_

0_91

0

UK_7

0_45

UK_1

00_8

0UK

_0_9

0UK

_0_7

50

Irelan

d_0_

40Ire

land_

85_2

00T

Ukra

ine_

410_

275

Russ

ia_0_

640

Cana

da_0

_150

0Ca

nada

_0_2

8K

US_0

_720

0US

_0_7

5K

Mex

ico_0

_102

0M

exico

_0_1

500

Arge

ntin

a_0_

900

Arge

ntin

a_0_

1450

Arge

ntin

a_0_

26K

Urug

uay_

220_

120

Braz

il_13

0_35

Braz

il_17

0_60

Braz

il_60

0_24

0Br

azil_

0_30

0Br

azil_

0_17

50Br

azil_

0_50

00

Colu

mbi

a_40

0_13

0Co

lum

bia_

0_16

0Co

lum

bia_

0_80

0

Peru

_0_1

700

Para

guay

_0_1

400

Chin

a_14

0_70

Chin

a_0_

150

Chin

a_0_

300

Chin

a_0_

940

Chin

a_0_

2000

Indo

nesia

_4_2

Indo

nesia

_0_4

Indo

nesia

_0_1

00

Kaza

ksta

n_50

0_80

0

NSW

-180-

65NS

W-2

00-8

0VI

C-35

0-15

0Q

LD_9

00_2

80Q

LD-5

20-3

10NS

W-5

00-4

50Q

LD-2

300-

750

QLD

-270

0-93

0NT

-650

0-17

00AU

_0_2

7K

Mala

ysia

_0_2

Mala

ysia

_0_1

4M

alays

ia_0

_36

Mala

ysia

_0_2

80

Tuni

sia_0

_45

SAfri

ca_0

_300

0SA

frica

__75

K

Nam

ibia

_0_6

00Na

mib

ia_0

_25K

Figure 18: Cost of production (%) for Australian farms compared to the average

0

10

20

40

60

70

%


30

50

Direct costs enterprises Overhead costs Paid labour

90

100

80

Rents paid Interest paid Depreciation

NSW

-180-

65

NSW

-200

-80

VIC

-350

-150

NSW

-500

-450

QLD

-520

-310

QLD

-900

-280

QLD

-230

0-75

0

QLD

-270

0-93

0

NT-

6500

-1700

AU_0

_27K

Aver

age

for

69 fa

rms

Australia’s cost of production (Table 2) ranges from US$761/100kg cwt sold to US$311/100kg cwt sold and the Australian average (US$544/100kg cwt sold) is close to the total average for all the farms (US$506/100kg cwt sold) – Table 2. Australia’s average cost of production is higher than the cost of production in Brazil and Canada, but some of the Australian typical farms have a lower cost of production.

Although Brazil has lower cash costs, its opportunity cost of land is higher than in Australia, which increases the cost of production. US farms have a lower cost of production compared to the average and to most Australian farms, the Canadian farms and Brazil due to not having any opportunity costs for labour, land or capital.

Table 2: Cost of production (US$/100kg cwt sold) for Australia’s farms compared to the average for all farms and the average for

farms in Brazil and Canada.

NSW- 180-65

NSW- 200-80

VIC- 350-150

QLD_ 900_280

QLD- 520-310

NSW- 500-450

QLD-2300-750

QLD-2700-930

NT- 6500-1700

AU_ 0_27K

Average for 69 farms

US Brazil Canada

Total cost of beef enterprise

665 544 524 311 631 478 761 645 478 407 506 381 410 439

Cash cost 431 341 297 197 466 312 497 471 375 398 393 379 234 429

Depreciation 12 20 15 12 20 35 57 8 30 6 24 2 20 4

Opportunity cost 221 183 211 102 145 130 207 166 74 4 91 0 156 5

Opportunity costs 221 183 211 102 145 130 207 166 74 4 91 0 156 5

Labour 98 62 64 28 17 72 22 16 11 2 62 0 41 0

Land 111 99 130 53 126 40 138 149 31 0 48 0 102 1

Capital 13 21 17 20 2 17 47 0 31 2 14 0 27 5




Figure 19: Percentage composition of non-factor costs (excluding animal purchases) for Australian farms compared to average for 69 farms

0

10

20

40

60

70

%


30

50

Other inputsOther inputs beef enterpriseInsurance, taxes

90

100

80

Vet and medicine

Buildings (maintenance, depreciation)

NSW

-180-

65

NSW

-200

-80

VIC

-350

-150

NSW

-500

-450

QLD

-520

-310

QLD

-900

-280

QLD

-230

0-75

0

QLD

-270

0-93

0

NT-

6500

-1700

AU_0

_27K

Aver

age

for

69 fa

rms

Fuel, energy, lubricants, waterMachinery (maintenance, depreciation, contrator)Feed (Purchase feed, fertiliser, seed, pesticides)

Scotland

Figure 20: Total cost of production (including opportunity costs for land and labour)


AUSTRALIA

North America South America AfricaAsia/Oceania

0

100

200

300

400

600

800

1,400Top 25% The rest Bottom 25%

Farm inden�fica�on indicates Country_No.Cows_No.Finished ca�le sold

500

700

1,000

1,200

Austr

ia _

30_2

5Au

stria

_0_1

75T

Germ

any_

0_26

0Ge

rman

y_0_

285

Germ

any_

0_38

0Ge

rman

y_0_

525T

Germ

any_

1400

_800

Fran

ce_8

0A_7

0Fr

ance

_0_2

00

Spain

_0_4

00Sp

ain_0

_700

0

Italy_

0_91

0

UK_7

0_45

UK_1

00_8

0UK

_0_9

0UK

_0_7

50

Irelan

d_0_

40Ire

land_

85_2

00T

Ukra

ine-

410-

275

Russ

ia_0_

640

Cana

da_0

_150

0Ca

nada

_0_2

8K

US_0

_720

0US

_0_7

5K

Mex

ico_0

_102

0M

exico

_0_1

500

Arge

ntin

a_0_

900

Arge

ntin

a_0_

1450

Arge

ntin

a_0_

26K

Urug

uay_

220_

120

Braz

il_13

0_35

Braz

il_17

0_60

Braz

il_60

0_24

0Br

azil_

0_30

0Br

azil_

0_17

50Br

azil_

0_50

00

Colu

mbi

a_40

0_13

0Co

lum

bia_

0_16

0Co

lum

bia_

0_80

0

Peru

_0_1

700

Para

guay

_0_1

400

Chin

a_14

0_70

Chin

a_0_

150

Chin

a_0_

300

Chin

a_0_

940

Chin

a_0_

2000

Indo

nesia

_4_2

Indo

nesia

_0_4

Indo

nesia

_0_1

00

Kaza

ksta

n_50

0_80

0

NSW

-180-

65NS

W-2

00-8

0VI

C-35

0-15

0Q

LD_9

00_2

80Q

LD-5

20-3

10NS

W-5

00-4

50Q

LD-2

300-

750

QLD

-270

0-93

0NT

-650

0-17

00AU

_0_2

7K

Mala

ysia

_0_2

Mala

ysia

_0_1

4M

alays

ia_0

_36

Mala

ysia

_0_2

80

Tuni

sia_0

_45

SAfri

ca_0

_300

0SA

frica

__75

K

Nam

ibia

_0_6

00Na

mib

ia_0

_25K

1,300

900

1,100

Calf and feeder prices per US$/100 kg lwt

Europe

Direct costs for the enterprise make up the highest proportion of costs and are derived from the expenses outlined in Figure 19. There is variation between farms around their allocation of expenditure which is a product of their location and farming system. Supplementary feed to manage feed gaps is the highest expense for most farms, although this cost is very low for the Queensland and Northern Territory rangeland farms.



How efficient are Australian farms at beef cattle finishing?European systems are predominantly silage or grain based with long finishing periods and high final weights (> 600kg lwt) – Figure 21. QLD_900_280 had the highest finishing weight for the pasture system in comparison to the other farms and to the other finishing systems. These weights were also higher than 2017 for the same farm with a longer finishing period at 990 days, so they were mature steers (Figure 19). The finishing weights for the other Australian farms on pasture were < 500kg lwt. The Northern Territory farm was the lowest, at 300kg lwt, a response to the weights required to meet the live-export feeder demand from Indonesia and a reflection on the rangeland environment (Figure 21).

Figure 21: Change in live weight during finishing

Change in live weight kg per head

GRAIN-FINISHED

0

100

200

300

400

500

800


700

600

Indo

nesi

a_0_

4In

done

sia_

4_2

Mal

aysi

a_0_

2Ar

gent

ina_

0_90

0Ch

ina_

0_20

00SA

frica

__75

KN

amib

ia_0

_25K

Mex

ico_

0_15

00SA

frica

_0_3

000

Colu

mbi

a_0_

800

Arge

ntin

a_0_

26K

Peru

_0_1

700

Tuni

sia_

0_45

Braz

il_0_

5000

Spai

n_0_

7000

Mal

aysi

a_0_

280

Spai

n_0_

400

Chin

a_0_

940

US_

0_72

00U

S_0_

75K

NSW

_0_2

7KCa

nada

_0_2

8KCa

nada

_0_1

500

Indo

nesi

a_0_

100

Mex

ico_

0_10

20N

T-65

00-17

00Ar

gent

ina_

0_14

50Co

lum

bia_

0_16

0Q

LD-2

300-

750

QLD

-520

-310

Braz

il_13

0_35

NSW

-200

-80

QLD

-270

0-93

0U

krai

ne-4

10-2

75N

SW-18

0-65

Braz

il_60

0_24

0N

amib

ia_0

_600

NSW

-500

-450

Para

guay

_0_1

400

VIC-

350-

150

Braz

il_17

0_60

Uru

guay

_220

_120

Braz

il_0_

1750

Colu

mbi

a_40

0_13

0Br

azil_

0_30

0U

K_10

0_80

Irela

nd_0

_40

QLD

_900

_280

Chin

a_0_

300

Kaza

ksta

n_50

0_80

0Ru

ssia

_0_6

40M

alay

sia_

0_14

Ger

man

y_14

00_8

00Fr

ance

_80A

_70

UK_

0_90

UK_

0_75

0Ch

ina_

140_

70G

erm

any_

0_28

5U

K_70

_45

Aust

ria _

30_2

5G

erm

any_

0_38

0Ch

ina_

0_15

0M

alay

sia_

0_36

Aust

ria_0

_175

TIta

ly_0

_910

Ger

man

y_0_

260

Fran

ce_0

_200

Ge r

man

y_0_

525T

Irela

nd_8

5_20

0T

Days

Farm identification indicates country_No.cows_No.finished cattle sold

Weight gained during finishing (kg lwt) Weight at start (kg lwt) Finishing period (days)

900

0

200

400

600

800

1,000

1,200PASTURE SYSTEMS

SILAGE SYSTEMS CUT & CARRY

AUSTRALIA

Entry weights for Australian farms were generally >200kg lwt, as was for 51 other farms. Some of the European silage systems have entry weights below 100kg lwt and finish to >600kg lwt, generally adding the most weight of the four production systems, on average 374kg lwt – Figure 20. South American entry weights are generally between 150-200kg lwt and finish to <500kg lwt.

Grain finishing systems generally add more weight, averaging 256kg lwt weight gain, than the pasture systems. Grain-based systems typically finish cattle within a shorter timeframe (averaging 179 days) compared with pasture (507 days) and silage (340 days) – Figure 21.

Spain



The type of finishing system and the relationship between daily weight gains, changes in live weight and finishing period is clearly demonstrated by examining the daily live weight gain (grams/day) in Figure 22.

The daily live weight gain (gram/day) is higher in a grain finishing system compared to pasture and silage finishing system, as expected. However, when comparing cost of production by system (Figure 23) the range is similar, even though it seems counterintuitive that the average cost of production for grain finishing is lower than pasture or silage finishing systems. The average cost of production for grain finishing is US$426/100kg cwt sold, compared to US$463/100kg cwt sold for finishing on pasture and US$595/100kg cwt sold for finishing on silage. Grass is often associated with being a lower cost of production, yet the lower daily live weight gain (grams per day) and increased number of days required to finish cattle increased the costs compared to grain-finished animals – Figure 22. The result is sensitive to the price for grain, as demonstrated by the lower price for grain in 2018 which influenced this result.

The Australian grain-finishing farm achieves the highest live weight gain (grams/day) compared to the other grain finishing farms. The other Australian farms (pasture finishing system) have daily live weight gains (grams/day) ranging from the highest in NSW to the lowest in the Northern Territory rangelands system.

Figure 22: Daily live weight gain for different finishing systems

Daily live weight gain kg per head

GRAIN-FINISHED


Days

Farm identification indicates country_No.cows_No.finished cattle sold

0

200

400

600

800

1,000

1,200SILAGE SYSTEMS

AUSTRALIA

Indo

nesi

a_0_

4In

done

sia_

4_2

Mal

aysi

a_0_

2Ar

gent

ina_

0_90

0Ch

ina_

0_94

0Tu

nisi

a_0_

45Ch

ina_

0_20

00Co

lum

bia_

0_80

0M

alay

sia_

0_28

0M

exic

o_0_

1500

Spai

n_0_

400

Spai

n_0_

7000

Arge

ntin

a_0_

26K

US_

0_72

00Pe

ru_0

_170

0Ca

nada

_0_1

500

Cana

da_0

_28K

Braz

il_0_

5000

SAfri

ca__

75K

US_

0_75

KSA

frica

_0_3

000

Nam

ibia

_0_2

5KAU

_0_2

7KN

T-65

00-17

00Q

LD-2

300-

750

Nam

ibia

_0_6

00Br

azil_

600_

240

VIC-

350-

150

QLD

-520

-310

Braz

il_17

0_60

Colu

mbi

a_40

0_13

0Br

azil_

0_30

0Ar

gent

ina_

0_14

50Q

LD-2

700-

930

Para

guay

_0_1

400

Colu

mbi

a_0_

160

Braz

il_0_

1750

Braz

il_13

0_35

Indo

nesi

a_0_

100

Uru

guay

_220

_120

NSW

-200

-80

Irela

nd_0

_40

QLD

_900

_280

UK_

100_

80M

exic

o_0_

1020

NSW

-180-

65U

krai

ne-4

10-2

75N

SW-5

00-4

50Ka

zaks

tan_

500_

800

UK_

70_4

5U

K_0_

90U

K_0_

750

Ger

man

y_0_

285

Irela

nd_8

5_20

0TM

alay

sia_

0_14

Ger

man

y_0_

380

Ger

man

y_14

00_8

00Ru

ssia

_0_6

40Ch

ina_

0_30

0Ch

ina_

0_15

0Fr

ance

_80A

_70

Ger

man

y_0_

260

Ger

man

y_0_

525T

Mal

aysi

a_0_

36Au

stria

_30

_25

Chin

a_14

0_70

Fran

ce_0

_200

Aust

ria_0

_175

TIta

ly_0

_910

0

200

600

1,000

2,200

400

800

1,400

1,800

2,000

1,200

1,600

PASTURE SYSTEMS

CU

T &

CA

RR

Y

Figure 23: Comparing cost of production for finishing systems

US$/100kg cwt sold

GRAIN-FINISHED

Source: agri benchmark Farm identification indicates country_No.cows_No.finished cattle sold

SILAGE SYSTEMS

CU

T &

CA

RR

Y

AUSTRALIA

0

200

600

1,000

400

800

1,400

1,200

PASTURE SYSTEMS

Indo

nesi

a_0

_4In

done

sia_

4_2

Mal

aysi

a_0

_2C

olum

bia_

0_8

00

Nam

ibia

_0_2

5KB

razi

l_0

_50

00

Mex

ico_

0_1

500

Peru

_0_1

700

SAfr

ica_

_75K

Arg

entin

a_0

_26K

US_

0_7

5KSA

fric

a_0

_30

00

Arg

entin

a_0

_90

0N

SW_0

_27K

US_

0_7

200

Can

ada_

0_1

500

Spai

n_0

_70

00

Can

ada_

0_2

8KM

alay

sia_

0_2

80Sp

ain_

0_4

00

Tuni

sia_

0_4

5C

hina

_0_2

00

0C

hina

_0_9

40U

krai

ne-4

10-2

75A

rgen

tina_

0_1

450

Col

umbi

a_0

_160

Para

guay

_0_1

400

Mex

ico_

0_1

020

Bra

zil_

0_3

00

Bra

zil_

600

_24 0

NSW

-50

0-4

50B

razi

l_0

_175

0N

amib

ia_0

_60

0U

rugu

ay_2

20_1

20C

olum

bia_

400

_13 0

Indo

nesi

a_0

_10

0Q

LD-9

00

-280

NT-

650

0-1

700

Bra

zil_

170

_60

VIC

-350

-150

NSW

-20

0-8

0Ire

land

_0_4

0Q

LD-5

20-3

10Q

LD-2

700

-930

NSW

-180

-65

QLD

-230

0-7

50B

razi

l_13

0_3

5U

K_1

00

_80

Kaz

akst

an_5

00

_80

0R

ussi

a_0

_640

Ger

man

y_0

_285

Ger

man

y_0

_525

TU

K_0

_90

Chi

na_0

_30

0Fr

ance

_0_2

00

Ger

man

y_0

_380

Aus

tria

_0_1

75T

Italy

_0_9

10U

K_0

_750

Ger

man

y_0

_260

Chi

na_1

40_7

0C

hina

_0_1

50M

alay

sia_

0_3

6Ire

land

_85_

200

TFr

ance

_80

A_7

0M

alay

sia_

0_1

4U

K_7

0_4

5G

erm

any_

140

0_8

00

Aus

tria

_30

_25

Non-factor costs incl. depreciation Total labour cost Total land cost Total capital cost



In summary, Australian beef finishing enterprisesThe only Australian farm to achieve long-term profitability in cattle finishing in 2018 was the grain finishing farm, AU_0_27K. All other Australian farms could not recover the opportunity cost of land and labour, so long-term profitability was not achieved. Most other global cattle finishing farms, except China and a few farms in South America, also did not achieve long-term profitability.

The short-term and medium-term profitability for the Australian farms was mixed – the northern beef systems in Queensland did not achieve short- or medium-term profitability in 2018 due to drought conditions, while the southern beef systems and the Northern Territory farm achieved medium-term profitability.

Most Australian farms received average beef prices and, although not as high as China and Europe, they were above those received by most farms in North America and South America.

The Australian beef finishing enterprises had a wide range in cost of production and were generally above the global average for direct enterprise costs and land and labour opportunity costs. They also had lower levels of profitability than the cow/calf component within the whole farm beef production business, which has been the case for the last seven years.

Argentina



What is agri benchmark?agri benchmark is a global, non-profit and non-political network of agricultural economists, advisors, producers and specialists in key sectors of agricultural value chains. It is operated as an international network of research partners coordinated by the Thunen Institute – the German government rural research body.

agri benchmark has branches covering beef cattle, sheep, dairy, pigs, cash crops, horticulture, organic farming and fish. The cattle network has over 34 member countries, covering 75% of world beef production and has been producing the results of comparative analysis over the last 17 years.

The core competence of the network is in analysing production systems, their economics, drivers and perspectives.

agri benchmark aims to assist:

• producers to better align future production through analysis of comparative performance and positioning;

• non-profit organisations (NGOs, international organisations) to monitor global agricultural challenges;

• public and industry institutions to better plan research, farm policy and programs and make their case

• agri-businesses to operate successfully through in-depth understanding of markets and customers.

The agri benchmark cattle network covers both breeding and finishing enterprises (cow-calf and cattle finishing), which are typically conducted on the same farm in Australia. It is also unique in being able to separately measure the performance of the breeding and finishing operations even on joint breeding/finishing farms. Furthermore, it measures cattle enterprise performance separately from (and together with) other outputs where the farm business is diversified (in southern Australia typically with cropping and/or sheep).

Figure A1: Countries in the agri benchmark beef and sheep network

Appendix

Beef cattle operations are divided into cow-calf enterprises and cattle finishing enterprise, even when conducted within the same farm operation, as typically occurs in Australia. Cow-calf enterprises can be further divided into ‘outdoor’ and ‘winter barn’ systems. Finishing enterprises can be subdivided into ‘pasture’, ‘grain finishing’, ‘silage’ and ‘cut & carry’ systems.

The farm-level results in this report are drawn from the collection of ‘typical farm’ data in each country, and subsequent analysis and research efforts of all member countries culminating in the 17th Annual agri benchmark Conference in Windhoek, Namibia, 6-12 June 2019.

2019 Countries Farms Years in network

Beef 34 139* 1 7

Cow-calf 29 72 15

Finishing 32 106 17

Sheep 16 39 8

*39 of these farms ave both cow-calf and finishing

Beef country: > 66% of cows are beef cows

Dairy country: < 33% of cows are beef cows

Mix country: > 33% and > 66% of cows are beef cows

Source: PSD/FAS/USDA Online, Eurostat National stistics, own estimations



10 A preferred method compared to compiling data from a group of individual farms and ranking them according to the average, or above- or below- average which is argued as a futile exercise in farm business management economics (Sefton and Cox,2005; Ferris and Malcolm, 1999; Mauldon & Schapper 1970). 11 Such individual farm data is further ‘typified’ where necessary by replacing farm individual particularities by prevailing characteristics, figures, technologies and procedures.

A ‘typical farm10’ can be based on data for an actual farm judged to be typical of a main production system in a key region11, or ‘engineered’ by local producers and experts to be typical (using annual data drawn from farms in the key production regions).

In Australia, data was collected for nine typical beef farms in Queensland, the Northern Territory, NSW and Victoria (see Figure A2 and Table A1).

Table A1: Australian agri benchmark typical beef cattle farms

Held/Sold (Cows/Steers) Farm make-up

AU 180/65 (180 Cows held/65 steers sold) – northern tablelands NSW; Angus + sheep + wool; pasture feed base

AU 200/80 southern tablelands NSW; British breed; pasture feed base

AU 350/150 western districts Vic.; Angus; pasture, hay, oaten grain feed based

AU 900/280 central Qld; Bos Indicus; pasture, mineral supplements feed base

AU 520/310 south east Qld; Simmental X Droughtmaster; cattle + crops; pasture feed base

AU 6500/1700 Northern Territory, Bos indicus; live export; pasture, mineral supplements feed base

AU 500/450 northern slopes NSW; Charolais X Angus; pasture, hay, sorghum feed base

AU 2700/930 central Qld, Bos indicus; cattle + crops; pasture, oats grazing feed base

AU 2300/750 Qld Gulf, Bos indicus; pasture, mineral supplements feed base

Figure A2: Location of Australian agri benchmark typical beef farms and cattle density

HOBART

AU-200/80

ADELAIDE

SYDNEY

CANBERRA

BRISBANE

PERTH

DARWIN

MELBOURNE

Kilometres

250 500 750 1,0000

N

AU-500/450

AU-180/65

AU-520/310

AU-2700/930

AU-900/280

AU-350/150

>51

31 - 50

11 - 30

3 - 10

0 - 2

Legend - cattle per sq km

AU-6500/1700

AU-2300/750

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