Livestock prices are crashing as supply and demand dynamics pull the rug out from under the industry. And there could be more pain to come.
Roger Fletcher says the two things that keep farmers up at night are the weather forecast and being left holding sheep and cattle they can’t properly, or profitably, feed and water.
Veteran farmer and meat processor Roger Fletcher says weather forecasts are usually on the money these days.Farmers with the mental scars from the last east coast drought have spent most of this year hearing warnings about the onset of an El Nino weather pattern, and the. The prospect of drier conditions and the accuracy of modern weather forecasting has them spooked after three rainy years that produced record grain harvests, which were used to build up herd and flock numbers.
Fletcher says livestock producers hung on to lamb and cattle in the good seasons and now their farms are full. But only meatworks like the ones he operates in Dubbo in NSW and near Albany in WA are buying at the lower prices with very little farmer-to-farmer trade.“The processing side is one problem. But there are no farmers [in the market], they’ve all stopped.
Cattle were sent to slaughter in record numbers in those years. The subsequent herd rebuild led to Australian cattle being dubbed the most expensive in the world. Houghton says the price plunge has been exacerbated by the US slaughtering cattle at record rates and flooding world markets. He says that has hit sales to Japan, Korea and China, where the economic downturn is much worse than many people realise.
“It just hasn’t materialised, so we’ve seen stocks building up in the system, and it got to a point they just haven’t been able to clear those stocks fast enough,” Gidley-Baird says. “Sales just haven’t been as strong as what they were expecting them to be and are not as strong at the moment. That’s causing a build-up in the system when we’re trying to push more volumes into it.”
“Cattle and sheep producers probably started making some of these decisions back in May because we’ve seen increased livestock numbers through the market in May, June, July and into August.” The run of good seasons has helped many farmers build feed reserves and invest in water infrastructure that put them in a better position to ride out a dry spell and at least get cattle and sheep to market in a condition that meets the specifications of the abattoirs.Christopher Pearce
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