MEAT

 OVERVIEW

In 2014, the outlook in Meat industry is optimistic. The exports to the US, China, Korea and Indonesia have been very strong, exports in the first six months of 2014 are already 80,000 tonnes, or 17% increase when comparing to same period in 2013, although the industry has come up against some tough conditions over the past five years. 

 

Arid conditions in early 2009-10, particularly in northern Australia, severely reduced farm output. Cattle sell-off rates skyrocketed during this period, as farmers could not afford to keep cattle and were forced to sell them in an attempt to remain profitable. Since 2011-12, however, the industry has been recovering as weather conditions have improved, reducing input costs such as animal feed.  Over 2014-15, industry revenue is forecast to grow by 0.5% to $14.2 billion, assisted by the continual rise of export demand in line with a depreciating Australian dollar. Total revenue for meat processors is expected to grow at an annualised 2.2% over the five years through 2014-15.Beef exporters were particularly hurt by the Federal Government’s live export ban to Indonesia, Australia’s largest trading partner.

 

TRENDS 

Over the five years through 2019-20, meat production is anticipated to trend upwards as farmers establish themselves in the market following favourable weather conditions. Domestically, only modest growth in the volume of red meat consumption is expected, with organic and high-value meat expected to benefit the most.  Increasing meat consumption and rising beef prices driven by increased popularity of higher value beef products, such as organic and Wagyu beef, are expected to boost industry revenue. Similarly, the lamd and The volume of live cattle exports is projected to increase due to growing demand in Asia and Middle Eastern markets and depreciation in the Australian dollar. However, ongoing animal welfare concerns and the continued decline of exports to Indonesia are expected to limit export growth over the next five years.

 

REVENUE

Over 2014-15, industry revenue is forecast to grow by 0.5% to $14.2 billion, assisted by the continual rise of export demand in line with a depreciating Australian dollar. Total revenue for meat processors is forecast to grow at an annualised 2.2% over the five years through 2014-15.  Beef production is expected to increase, while lamb is expected to increase in value but decline in production. Over the five years through 2019-20, industry revenue is forecast to grow by an annualised 1.4% to reach $15.2 billion. The ability of meat processing companies to respond to changing national and international consumer trends, like halal and certified organic meat production, is expected to assist growth.

 

Export revenue as a share of revenue has been operating in band between 12% - 13.5% over past five years.  The peak in 2011/12 was mainly due to the decline in overall revenue of the industry.  Export revenue is forecast to peak in 2017/18 before declining once again. Export share has experienced significant growth since 2011/12 where it bottomed out at just over 55% to its current level of 65%.  Slowing growth is expected to continue over the next two years reaching around 66% before declining to 64% in 2018/19.

 

Source: Ibis Worldwide Report Meat Processing in Australia, September 2014; MLA Australian cattle Industry projections 2014, Mid-year update, July 2014