Taxes, quotas and alternative suppliers are dominating the live cattle trade discussions at the moment, however a greater concern for Australia is being able to supply the cattle and demonstrating why we should be the preferred supplier. The ability to do this will rest heavily on what happens in Queensland this year.
Live cattle export numbers out of the port of Darwin show that the volume of NT-sourced cattle has been relatively stable for the past 10 years, around 250,000 to 300,000 head. In the past two years, when we have seen the Indonesian quota go from just under 300,000 in 2012 and 2013 to about and above 700,000, the additional cattle have been driven primarily by cattle sourced from other states, mainly Queensland. This is also reflected by an explosion of live cattle from the Townsville port in 2014 and 2015.
Assuming that the NT and northern WA will still have similar volumes of cattle available in 2016, Queensland will need to source about 300,000 head to meet the 2016 Indonesian quota levels, plus more to meet demand out of Vietnam – around 300,000 head based on 2015 numbers.
This represents a significant market option for Queensland producers and, at prices of $3.40/kg out of Townsville, live exports are competitive with the domestic processors. While the current shortage of supply is driving these higher prices, longer term prices will moderate and producers and industry need to consider where live trade sits in the future.
Demonstrating a secure supply of cattle, along with all the other credentials that Australia has, will be a critical advantage in supplying growing markets. Therefore as Queensland producers look towards their future, consideration needs to be given to what role the live trade will play.
Much of the additional supply this year will be contingent on the southern Queensland markets having economically-viable access to the live trade market. The recent shipment of cattle out of Port Elma, in Central Queensland, certainly signals the movement of the activity further south, which can only help to shore up supply to this very important market.
Longer term, a live cattle trade of this volume represents a genuine option to sell cattle into, supporting diversity of markets within the beef sector. Few other agricultural enterprises enjoy such a range of supply options that they can market to with a variety of products. Whilst circumstances often dictate where the producer sends their product, the diversity within the beef sector is so important when dealing with the many vagaries faced by all primary producers.