Shocks can trigger solutions

Ivan Rogers, Tammin feedlotter, chairman of the WA Lot Feeders' Association and WA Beef Council board memberCountryman

For beef producers, 2011 was almost split in two - the domestic market and the live export market.

On the domestic market, the achievement was the significant growth in demand for product from supermarkets and from eastern states farmers restocking.

Internationally, there was added demand from the Turkish market.

The beef sector experienced a major bounce in prices, which lifted the market and confidence and gave a general feeling that the beef market had turned the corner.

We had bounced along a pretty rocky bottom for four or five years and it was a major achievement for that to start to turn around.

But for those involved in live export, the suspension of trade in June 2011 came as a shock.

That's also been exacerbated recently with the announcement of the eventual ending of export quotas in Indonesia and a 40 per cent cut in numbers.

I think there are some serious challenges for producers who have concentrated on, and bred cattle for, the live export industry.

The critical thing to remember is that this is not an uncommon cycle in an agricultural commodity.

Often, it is a supply or demand shock that can trigger solutions.

But what we have now is an impending headache in 2012 for WA's cattle industry, because 40 per cent of the industry is based on live export. If that is affected in any significant way, then the whole State's cattle industry is affected.

There needs to be some solutions workshopped and that probably needs to revolve around investigation of alternative markets for cattle, whether they are going to be in live export or a boxed beef market.

You want continual growth and you don't want to see an industry retracting.

But it's a commercial world out there and you have to understand the cost of production in Australia is high.

Is it really feasible to manufacture boxed beef in Australia and export it to those markets?

We really need to do that due diligence. It's not just something where you can just say, we'll just go out and find some markets - you need to be realistic about it.

However, we've got a good structure in WA for leadership in partnership with government through bodies like the WA Beef Council to put those things on the agenda.

My take-home message would be that from shocks, that's where solutions come.

The suspension of trade to Indonesia was a huge shock that came out of the blue. You could never look at that as being a positive at the time and you still probably can't see it as a positive now. But it forces the industry to look at itself and ask what needs to be done.

Government and industry have worked well together in WA and I think they should be congratulated on that, especially Agriculture Minister Terry Redman and northern producers.

I also believe we need to get our head clearly around the carbon farming initiative.

We know that agriculture has been excluded from the Emissions Trading Scheme (ETS), but it will be included at some point.

We need to ascertain if it is an opportunity or a threat, because the bottom line in many agricultural industries is pretty thin and if it's significantly and negatively impacted by something like the ETS, we have to be prepared for it.

That is an area in which research and development would be valuable, and it is already happening.

Meat and Livestock Australia, through peak cattle bodies, is working on projects.

Another significant thing that happened in 2010 and 2011, and continues to slowly build, is the retail market's understanding of consumers' need for local product - WA beef on WA shelves.

We're seeing a understanding and a push from the two major retailers and we support that strongly.

Overall, I am optimistic about the beef industry.

I feel it's a commodity that is cyclical, it's been bouncing along the bottom for some time and the margins have been very tight.

At producer, feedlotter and processor level - I don't think any of us have been doing particularly well but there are signs globally that there is some lifting of demand.

The US herd is reducing and we're seeing extra demand come out of Europe with the European Union quota and what happens there will impact on the east coast market and that will flow through to the west coast market.

I do feel we have turned the corner in the beef industry.

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