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Northern grazing markets

Live export market

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

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).

Regional variation

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.

Vulnerable to fluctuation

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.

Implications for 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).

Stores

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.