WA cattle farmers are enjoying an all-time high in cattle prices due to a cattle shortage over east, but retail demand for low priced meat is forcing WA butchers to operate with lean margins.
The national cattle herd is at an all-time low at 25 million head of cattle when in previous years it has reached up to 32 million.
Cattle Council Australia president Geoff Pearson said Western Australia, in the last two years, had been in a position to maintain its cattle herd, unlike some other states. Although, more than 100,000 WA cattle had been sold to farmers in the eastern states for restocking due to stock losses caused by floods, fires and droughts.
Curtin University senior lecturer in supply chain management and logistics Elizabeth Jackson said one cause of the cattle shortage was the gestation period of a cow. It takes 9 months for her to have a calf and once the calf is born, she needs to wait another two years before she can reproduce.
Another delay has been because of worker shortages in the meat processing plants. “There have been outbreaks of COVID-19 in two abattoirs in the eastern states,” Dr Jackson said.
The final stop on the meat supply chain is “the local butcher shops, which are being swallowed up by the big players because they can’t compete with the low prices that Coles, Woolworths, and Aldi can provide because of mass buying,” she said.
Dr Jackson said Australia marketed its beef on the basis of quality through clean, green production and high animal welfare standards, rather than cheap prices like its major competitors China and South American countries.
Secret Harbour Butchers owner Callan Wheeldon said: “Before COVID-19 I was paying just under $30 a kilo for scotch fillets’ but since then the buying price has risen to $38.99.” This means Mr Wheeldon has had to mark up the selling price to $54.99 to have a profit margin. He said: “Bodies of beef have also risen to nearly $10 a kilo, whereas before COVID-19 it only cost $7 to buy into the shop.”
When COVID-19 hit in 2020, the State Government helped small businesses that could show, based their books for the previous 12 months, that lockdowns had directly caused financial loss to their business. Mr Wheeldon’s butcher shop didn’t qualify, as it had only been trading for six months at the time.
He said: “We have nearly halved our sales and are running our business at a loss. I don’t think the government turning around and giving us money now is going to sort the issue out. The damage has been done so we just have to pick the pieces up.”
On the other end of the supply chain, increasing cattle prices have profited Australia’s beef and cow-calf producers.
Livestock agent of Nutrien Ag Solutions Lyndsay Flemming said: “Compared to 12 months ago, we have seen an increase on average of $500 a head on cattle.
“It’s excellent to see that the market is where it is and that the farmers are being rewarded for what they are producing, and to top it off we have had one of the best seasons we can remember so condition-wise the cattle are all in top shape as well.”
When it comes to selling cattle there are two ways: One is to the abattoirs which is called a dress price, the other is when the cattle get sold through the sale yards. This is called a live price. The average sale-yard prices are expected to rise by 12 per cent from 2021 to 2022, according to the September 2021 Quarter Australian Government Agriculture report.
According to Meat and Livestock Australia Market reporter Tracy Kilner, at the start of October this year prime heavy weight cows were sold from $2.88 cents to $3.64 per kilo, but at the end of the month that price rose to $2.96 to $3.16 per kilo depending on the quality and age of the cow. Between being traded at that price and reaching a retail counter, the beef passes through the supply chain stages Dr Jackson discussed.
WA Minister for Agriculture and Food Alannah MacTiernan was contacted but declined to comment.