Butchers reshuffle cabinets as beef prices edge higher

Australians have so far continued to spend the same dollars on beef at the shop counter, accepting less in the way of kilograms as a result of higher prices.

However, that might be coming to an end and there have also been some subtle changes happening in the retail space that could have a lasting effect on Australia’s domestic beef market.

Australian Bureau of Statistics indicative retail beef prices averaged $19.34 a kilogram retail weight in the September quarter, up 19c/kg on the previous quarter and $1.58/kg on this time last year.

In comparison, chicken averaged $5.30/kg, back 19c/kg year-on-year.

Meat and Livestock Australia analysts noted the surge in cattle prices, however, had outpaced the increase at the retail level.

The beef producer share of the retail dollar has now exceed 50 per cent for the first time on records going back to 1998, averaging 51.25pc in the September quarter, they said.

Butchers say that fact is largely lost on the consumer, who - although expressing strong support for the farmer - is now pushing back hard against rises in retail prices.

Chairman of the Australian Meat Industry Council’s national retail group, Queensland butcher Ray Kelso said retail beef prices had now reached a point where there was no room for further upward movement without losing significant numbers of consumers.

“They can’t go any higher before we turn people away for good and once we lose them, it will cost the industry billions to get them back, if that is possible at all,” he said.

“Once they start eating noodles, their lifestyle has changed.”

Even at current prices, there was still comparatively good value in beef, he said.

“A kilogram of  mince will feed six people - compare the price of that to meals at a fast food restaurant,” he said.

“But we need everyone in the industry, including farmers, to see it as their job to get that message across.”

Beef had always been the backbone for butchers, dominating volume turnover, Mr Kelso said.

“Beef gives us our volume - our kilo weight,” he said.

“In our shop, for example, it is 40pc beef sales compared to 12pc chicken,” he said.

“In terms of profitability, however, they are now much closer.”

That, combined with the “price-friendly” nature of chicken, was encouraging butchers to try to sell more poultry and the gap in terms of volume turnover was narrowing, Mr Kelso said.

“There is a fair bit of cabinet front space re-arranging happening now to give more space to chicken,” he said.

ANZ’s head of agribusiness Mark Bennett said consistent lower price points was driving up per capita consumption of white meats at the expense of beef.

It was impossible to say when prices would hit the ceiling but “looking at the numbers, you’d have to think we are getting close - people only have so much to spend,” he said.

The one saving grace at the moment is that butchers are reporting their costs of sourcing cattle have held steady over the past month, which should in turn start to flow through to slight decreases in retail prices.

All segments of the cattle market have recorded a steady decline for the past few weeks on the back of improved supply.

In Northern NSW and South East Queensland that has been driven by cattle coming off oats and the season turning dry.