Northern Beef Situation Analysis 2009 - QLD

Summary

This report was commissioned by MLA to look at the current state of the north Australian beef industry in terms of productivity and profitability. The research shows that profit maximisation amongst the enterprises studied, is a function of both cost minimisation and optimisation of production levels.  
Enterprises which maximised profit, did not rely on price received, had slightly higher production per large stock unit (LSU), had lower stocking rates when adjusted for rainfall, significantly higher gross margins and significantly lower overheads in the business. The major issues facing the industry include inadequate scale in the more closely settled areas, significant cost escalations in both overheads and direct costs, doubling of debt per LSU over the last decade while return on assets (ROA) has declined to very low levels of 0.3% to 2.0% on average. Approximately half of the producers studied have spent more than they earned for six of the last seven years, indicating the northern beef industry is generally in a very unprofitable and unsustainable state.