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State of play

With fundamentals pointing to consistently strong beef and cattle markets for the next few years, it’s time for producers in Australia’s north and south to consider how best to invest in the industry’s future.

Words: James Anderson

As the Australian beef industry recalibrates following the biggest turn-off of cattle in its history, all eyes are on the future. If a few good years of profitability are ahead, as forecast, what does the industry need to do to bank those years against future slumps?

The Australian herd is down to its lowest levels in 20 years. More than 17.5 million adult cattle were slaughtered through 2013 and 2014; 2.06 million head were shipped live offshore. The herd topped out at 29.2 million head in 2013, but Meat & Livestock Australia (MLA) forecasts it will sit around 26-27 million through 2015-17 before recovering, weather permitting.

As the herd is rebuilt, exports will drop-by 18.6 per cent for beef and 30 per cent for live cattle in 2015, according to MLA-as producers turn off less cattle. But demand for Australian beef in overseas markets is strong and the lower Australian dollar is improving the price competitiveness of Australian beef.

Down south

Cattle producers in southern Australia should be in a stable position for the next few years. Signals from Australia's top three beef markets-Japan, the US and South Korea-are all promising. These countries collectively bought 841,000 tonnes of Australian beef in 2014.

The US, in its own herd-rebuilding phase, seems likely to continue soaking up huge quantities of Australian beef. In the northern Asian countries the effects of Free Trade Agreements (FTAs) in lowering import tariffs should help offset the rise in costs of Australian beef as the value of cattle lifts, and potentially lessening competition from the US may do the same as its beef exports are forecast to fall by about 2 per cent.

"Times of relative prosperity are occasions to consider how the industry should be investing in its future. "

If the next few years are a time of consolidation, what should the southern beef industry be investing in to carry it forward?

That question has long occupied Lucinda Corrigan, who runs Rennylea Pastoral Company, near Albury, NSW, with her husband, Bryan. Throughout the 2000s, Corrigan has been a director of MLA and three agriculture-related Cooperative Research Centres (CRCs), including the Beef CRC. She currently chairs the NSW Primary Industries Ministerial Advisory Council.

The beef industry has been investing in genomics-the science of predicting breeding outcomes using DNA-for about 15 years. Corrigan thinks it's time to make that investment deliver on its promise.

The dairy sector has already shown that genomics can guide better breeding decisions for hard-to-measure carcase traits and production issues such as methane efficiency. Through DNA assessment, genomics can also forecast the lifetime potential of an animal from the moment it is born. Corrigan wants those tools available for beef cattle.

Beef animals are much harder to work on through genomics because they are more genetically diverse. But then, Corrigan says, genomics also holds the key to better animal "design". The industry can step away from the broad categorisation of breeds and use genes to design cattle that perform optimally in different environments.

However, work on enhancing animal performance is not enough. In a world facing the twin perils of resources constraints and pollution, Corrigan also thinks that new sources of nitrogen, a key plant nutrient, will be vital for cost-effective beef production. Nitrogen-fixing legumes such as tedera, serradella and biserrula are all showing considerable promise in the research pipeline, but the results are yet to make a difference on-farm.

The industry also needs to secure its reputation in the community, Corrigan thinks. Among other things, she hopes to see better research on how community attitudes to animal welfare are evolving. On such matters it is far better to act than react.

Technologies such as the National Livestock Identification System (NLIS), global positioning systems (GPS) and wireless broadband are also promising to deliver greater efficiency.

All function well independently, Corrigan says, but there's scope to put the data from these and other technologies together in ways that enhance production efficiency.

Up north

Northern Australia's beef industry has its own suite of possibilities for the future. Recently, despite the challenges of drought, the north's live export-based beef economy has found a much firmer footing.

New live export markets have sprung up in South-East Asia. Vietnam took 180,000 head of live cattle in 2014, a 169 per cent increase on 2013, to support its thriving beef trade with China. Indonesia unexpectedly imported 700,000 head of cattle in 2014, but there are signs that Indonesia is looking to lessen its dependence on Australian stock, possibly by turning to Brazil.

However, Tracey Hayes, CEO of the Northern Territory Cattlemen's Association (NTCA), is confident that Indonesia will remain a major live export customer. She believes that natural synergies between Australian beef production and Indonesian demand, and the strong business ties between the countries, will keep the alliance secure.

The north also has a new asset: the Australian Agricultural Company's (AACo) new $91-million Darwin abattoir, the only abattoir between Townsville and Broome. At full capacity it will be capable of processing 220,000 head a year.

AACo intends for the abattoir to process mostly cull cows, and mostly from its own properties. But there remains considerable scope for others to send cows to the works, and Hayes believes the north has the opportunity to tighten up herd structure by eliminating older cows. Until now, cull cows often did not fetch enough to warrant trucking them to an abattoir thousands of kilometres away.

Against this robust outlook, the North Australia Beef Research Council (NABRC) has outlined six main areas of research needed to secure the industry's future, including further supporting the implementation of RD&E strategy, in their 'Priorities Prospectus for the northern Australian beef industry'.

Within those broad areas, NABRC's Chairman, vet Dr Lee Fitzpatrick, thinks there are several priorities. Like Corrigan, he puts genetics first. The south has widely adopted breeding tools such as Estimated Breeding Values (EBVs), but much of the north hasn't even started thinking about using genetic evaluation to increase animals' performance.

Fitzpatrick believes the potential to lift the productivity of the northern herd with better genetics is "substantial", but the gains he can foresee are being bogged down in the challenges of proving the value of using genetic evaluation tools in breeding northern cattle.

Enhanced grazing management is also a priority. This is an economic challenge as much as a cultural one; improving grazing management means strategic development of water points and fencing, and many pastoral operations currently don't have the finances to make those changes.

Related to both these issues is the question of human capacity. Pastoralists are an ageing demographic, and so are the scientists who work on their behalf. Fitzpatrick estimates the median age of livestock scientists is in the fifties.

Fitzpatrick predicts the rise of a new acronym, RD&A. Doing the research and development (R&D) is important, he says, but in the end it's the adoption (A) of that science that drives renewal, bringing in the new people and the new capital needed for the pastoral industry to remain vibrant.