3. Australian cattle industry projections - Australian cattle herd
On the back of two very wet years (2010 and 2011) across key cattle breeding regions, Australian cattle producers are firmly entrenched in rebuilding mode. With 2012 assumed to be another positive year for pasture and water supplies, this rebuilding momentum is expected to continue, driving the Australian cattle herd to its highest level since the mid-1970s.
2011 was a year in which the Australian Bureau of Statistics (ABS) undertook its five-yearly national census, with a preliminary estimate for the Australian cattle herd (including dairy cattle) of 28.809 million head as at 30 June 2011 – an increase of 9% from the previous year’s survey estimate. Comparing like with like, the previous census year in 2006 registered a similar national herd of 28.393 million head.
While the methodology behind the 2011 census figure cannot be faulted, the percentage increase from the previous year’s survey estimate, at 9%, is of concern. This indicates that the final ABS herd estimate for 2010, at 26.550 million head, is probably lower than actual due largely to the erosion of the survey base since the last census in 2006.
In correlating previous annual herd numbers, annual turnoff and seasonal conditions, the increase between 2010 and 2011 of 9% is very high, and given industry consultation, it is most unlikely. In light of this we have revised up by 3.7% the ABS herd estimate for 30 June 2010 to 27.55 million head.
This takes the annual increase as at 30 June 2011, to 4.6% - an annual percentage increase that is more in line with the seasonal conditions, turnoff rates and historical growth rates.
Such growth in the Australian cattle herd would be difficult to dispute, given the sustained reduction in female cattle slaughter for the past two years, above average seasons and anecdotal evidence of rebuilding from all states (with the exception of southern WA in 2010 and the first half of 2011). The 2011 census result showed that most of the herd growth for the year ending 30 June 2011 was in Queensland, SA and NSW (assumed to be northern NSW).
The growth in Queensland through to 30 June 2011 has been underpinned by two very wet years, with the state’s herd standing at a record 12.8 million head. While there have been some cattle losses due to flooding over this period, this has been more than offset by the improved breeding conditions. Comparing five-year census figures (like with like), the Queensland cattle herd has increased 11% since the June 2006 census. During this period, Queensland producers experienced the full breadth of seasonal conditions, from severe droughts in 2008 and 2009, to record flooding in 2010 and 2011 – so an 11% increase should be seen as a good result.
The only other state to record an increase in herd numbers between the census years of 2006 and 2011 was the NT, at 12% – further emphasising the steady migration of the Australian cattle herd north. In 2006, Queensland and the NT accounted for 47% of Australia’s total cattle herd, or 13.33 million head. In 2011 this had grown to 52% of the national herd, or 14.85 million head.
In contrast, NSW and Victorian cattle numbers have fallen 6% and 8%, respectively, since 2006, with SA and WA down 3% and 12%, respectively. Tasmania’s herd declined 2% during the five year period. While like Queensland and the NT, the southern states have faced variable seasonal conditions, with droughts and flooding throughout the five year period, the competition from other farming enterprises has also contributed to the decline in herd numbers. For southern producers, the better per hectare returns from sheep meat production or cropping has seen the financial attraction of cattle production eroded, especially for mixed producers.
Given the wet second half of 2011 and forecasts for conditions to remain favourable into 2012, the Australian cattle herd is forecast to increase 4.1% in the year to 30 June 2012, to 30 million head. This would be the first time since 1976 that the herd had reached this signpost. The growth in 2011-12 should be across all states, even including southern WA, but focussed upon northern NSW, Queensland and the NT.
For 2013 and beyond, the herd expansion is expected to continue, albeit at a diminishing rate, levelling off at 31.5 million head in 2015 and 2016. Again, herd growth figures are very dependent upon seasonal conditions, which for these projections are assumed to be average through to 2016. The mildly positive income outlook for 2012 onwards will assist the growth throughout this period.
However, there are some major factors that could constrain, or even reverse, the forecast herd growth for the coming years. The most obvious is a return to widespread drought conditions, especially for the major cattle regions of northern NSW, Queensland and NT. A sustained decline in cattle prices, while not anticipated, could also force more cattle onto the market, slowing growth. Any prolonged doubt about the financial viability of Australia’s live cattle export trade could influence the herd prospects for northern Australia.
Overall, the Australian cattle herd’s expansion for the medium term is underpinned by the recent run of seasonal conditions, which has enabled producers across Australia to confidently retain and expand breeding numbers.
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