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Regional feedlot investment study (updated)
The feedlot industry is a crucial part of Australia's beef supply chain. Commercial feedlots first emerged in Australia in the mid-1960s on the Darling Downs in Queensland (ABS, 2005) addressing variability of beef in the domestic market. Since then, demand for a consistent supply of premium-grade grain-fed beef, both domestically and overseas, has led to a significant expansion in the Australian feedlot sector. In 2017, 2.9 million cattle were turned off from Australian feedlots, 20% above that of a decade ago and almost triple the number in the late 1990s.
Feedlots play an important role in rural and regional economies, as buyer of goods and services and as employers of staff. From a supply perspective, feedlots enable a year-round supply of consistent quality beef that satisfies domestic and international specifications. Through their operations, feedlots also support greater efficiency in the pastoral and processing sectors both up and downstream.
Meat and Livestock Australia (MLA) has commissioned this project to provide up-to-date information on the economic contribution of feedlots in Australia. It is an update of a previous project (B.FLT.0472) and uses similar methodology, including the use of consultation to inform the economic modelling.
The key results from the analysis include:
Average feedlot utilisation in 2017 was 81%, with a national quarterly average of 1.03 million head of cattle on feed
The total (direct and indirect) economic contribution of the national feedlot industry to gross domestic product (GDP) in 2017 was $4.4 billion, and approximately 31,000 full time equivalent employees.
Relative to 2012-13, the feedlot industry had a much higher direct and indirect economic contribution in 2017. This is attributable to improved operating conditions for the feedlot sector, including higher grain-fed cattle prices and lower feed grain prices relative to 2012-13. The higher indirect contribution reflects an increase in feedlot expenditure on intermediate inputs, principally cattle and feed, in 2017, driven by higher industry turnoff, principally via an expansion in capacity and an increase in average turnoff weights.
Economic contribution alone is not a complete assessment of the value of feedlots to the national economy. Two computable general equilibrium scenarios were modelled in this analysis to highlight the economic impact of the feedlot industry.
The first scenario considers the regional economic impact of constructing a new 15,000 SCU feedlot in Goondiwindi. The economic impact, including both construction and operational impacts, is estimated to increase in GDP by $25m and employment by approximately 100 FTE employees in 2029.
The second scenario estimates the national economic impact of removing feedlots and a decline in grazing productivity (upstream), as well as a decline in processed meat manufacturing (downstream). If feedlots shut down in 2018, this is estimated to reduce the size of the economy by $10.3 billion and 49,000 FTE employees in 2029. These values are greater than 2012/13 analysis, reflecting the inclusion of downstream impacts and improved operating conditions and record feedlot turnoff at the time of the current study.
Overall, the economic analysis shows that the value of the feedlot sector goes well beyond the sector itself, increasing productivity in other parts of the beef supply chain and with impacts that flow through the regions in which feedlots operate. When the economy is modelled without feedlots, there is a very large negative impact on GDP reflecting an influence well beyond its direct impacts.
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Regional Investment Study Update
Regional feedlot investment study update
This page was last updated on 10/04/2019