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How does your cattle farm profitability compare?

29 April 2021

Key points:

  • Australian cattle operations are overwhelmingly profitable in the short and medium term —but land prices are putting pressure on long-term profitability
  • Feed, fertiliser, seed and pesticides remain the biggest cost for Australian beef farms
  • Australian cattle farms are less reliant on cash-crops and government subsidies than our competitors

MLA today released its annual AgriBenchmark report — How are global and Australian beef producers performing?

The report contains important profitability information and analyses how typical Australian cattle farms compare to their international competitors. The report covers pricing, efficiency, productivity and profitability.

The findings of the report are encouraging for the Australian beef industry, with seven of the eight farms featured in the report being profitable in both the short and medium-term. One area for Australian farmers to monitor is land values – with high land prices putting pressure on cattle farms’ long-term profitability.

Competitors

At an international level, the report highlights the reliance of Australia’s European competitors on government subsidies. It also demonstrates the rise of India and Brazil as global beef production powerhouses in the last decade, in contrast to Russia and eastern Europe, where production has fallen significantly since the 90s.

Production

The report highlighted that Australia’s weaning rates sat at average to below-average on a global scale, partly due to our reliance on Bos indicus breeds, which generally have lower weaning rates.

Costs

Australian farms pay the most in interest globally, due to our high levels of farm ownership. In other countries, leasing and rent costs are a higher percentage of farm costs, as farm ownership rates are lower. Australia also pays more insurance and taxes than our global competitors, while we pay less for vets and medicines.

Some key points in the report are:

  • The average cost of production per 100kg live weight (lwt) of cattle produced on a global scale is US$486 (half the Australian farms that participate in AgriBenchmark outperform this metric).
  • The average cost of production for feedlots is $USD400 per 100kg lwt.
  • The extensive nature of large properties in the north of Australia means they have the ability to achieve large profits through economies of scale, but also large losses.
  • Global beef supply growth slowed in the last 10 years due to feed and environmental constraints.

© Meat & Livestock Australia Limited, 2021