Recent fuss over the possibility of meat causing cancer has not been a snag for exports of Aussie meat, but rising prices are causing trouble for some with a stake in the industry.
The value of meat products sold offshore is up a whopping 2.4 per cent in just the last month and 14 per cent in the last year, according to official statistics.
While graziers are whooping it up, these are tough times for the local meat preparation market forced to compete with eager foreign buyers for Aussie meat.
Wholesale butchers are doing it tough, even cutting rosters because there isn’t enough meat to keep everybody busy.
Supply is limited. At the end of the day there is only so much cattle country and only so many head it can support, and farm capacity doesn’t change overnight. When you have a growing Asian appetite for meat as the new normal, and foreigners prepared to pay more than domestic customers, then it’s no surprise that’s where supply is going.
High meat prices are due to a combination of growing demand and tight supply due to hot temperatures and low rainfall.
Drought means limited supply overall, but acutely tough conditions in southern Australia have had a peculiar effect for the local meat industry in recent weeks.
Dead grass and barren paddocks mean farmers realising they can’t keep animals as long as they planned, and this has driven a bump in numbers of cattle available for processing. That means work is available and prices are falling in certain regions in the short-term.
But the long-run effect is negative – those animals will not be there in the months and weeks ahead. Business is likely to dip for abattoirs and meat processors over that longer time period.
If there is an Asian dining boom coming we are in reasonable shape for it – so long as we can get raw materials like meat.
There have been some high profile transactions of significant farming properties in recent times and some people have expressed concern we might be selling the farm instead of the produce.
Ultimately though, the food manufacturing industry remains staunch and its prospects continue to brighten.
Manufacturing in Victoria grew last year. That’s a pretty good sign.
Manufacturing is still thought of as being a dirty industry but in reality modern manufacturing is anything but. Growing sub-sectors like pharmaceuticals and food manufacturing – all being made in hyper clean environments.
David Knowles is a business advisory partner at Pitcher Partners. His blog was first published in Stock and Land