Cattle price drop and high beef retail prices: MLA Updates forum at Toowoomba covers the tough topics

These were two of the big questions on the minds of producers at Meat & Livestock Australia's Updates forum in Toowoomba, Queensland, yesterday and the answers should provide plenty of reassurance for cattle producers that they are in the right business.

More than 700 people registered for the event, which is the first in-real-life annual conference the big red meat service provider has been able to hold since November 2019, due to the havoc wreaked by the pandemic.

MLA leaders took people through the extensive research, adoption and marketing work underway but question time predictably featured the big drop cattle prices have taken in recent weeks.

Will producers be in trouble post-Christmas and have we got problems with our international customers, levy payers wanted to know.

MLA managing director Jason Strong said what those questions highlighted was the challenge the industry had with being comfortable in its own success.

Australia's beef industry was in a very different position today, compared to five or ten years ago, let alone 20, he said.

"Yes, cattle prices are coming back off their highs but these are highs in an environment that is not only better than we've ever seen before, but better than we could have ever imagined," he said.

There had been much talk this week about how much the 90CL (chemical lean) price for manufacturing beef into the United States had come down, he said.

The average 90CL price for this year is US$2.84 per pound - higher than last year which itself was the highest on record.

That equates to $9.70 a kilogram in Australian dollars.

"That's what the price has come back to for 90CL, which is the most commoditised beef product that Australia sells around the world," Mr Strong said.

"So yes, prices are coming back but our industry is in incredibly good shape and we have progressed to a point where the supply chain is capturing value that can benefit everybody.

"In the past 20 years, we've gone from being a commodity-driven industry to having a high quality, credentialed, traceable, verifiable, consistent product that has preferential access into markets.

"Prices will move around, there's no question, but the macro drivers are so much more positive than we've ever seen.

"Let's not panic and drive unnecessary market movements as a result."

MLA's senior market information analyst Ripley Atkinson, in demonstrating the interactive online market intelligence now available to levy payers, said the fall in prices was supply driven.

Yarding sizes are the highest they have been since November 2020.

That's not a season-driven rush to offload, it is rebuild cattle hitting the market, Mr Atkinson said.

"Slaughter is also now at the highest it has been this year, which is telling us the rebuild cattle are reaching processor weights," he said.

"We knew it had to come - this supply increase is no surprise."

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After data was presented showing the cost of retail beef was increasing at a rate 2.5 times that of chicken, NSW Santa Gertrudis breeder Rob Sinnamon, Kyogle, asked whether that was an issue.

"It's great from a producer's perspective but are we running the risk of becoming a luxury protein only?" he said.

MLA general manager marketing and insights Nathan Low said there were parts of Australian beef's profile that absolutely were becoming a luxury protein.

"What the insights say is there are people who are prepared to pay those prices," he said.

"As an industry, the thing we need to think about is how big do we want to be in Australia?

"Are we attached to our market share such that we will sell a cheaper product to drive domestic market share when that product could command a higher price in international markets?"

Even though the domestic retail price of beef had moved up substantially, beef's volume share decline over the past 20 years had been small, he said.

"Beef still has a substantial 30pc volume share - it is the number two volume protein in the market," Mr Low said.

"I don't think we want to compete head-to-head with chicken.

"Our value share is growing, our share of wallet is now higher than it has ever been - that's a healthy position to be in."

The inbuilt protection for beef was the diversity of cuts it delivered and the amount of dishes it can feature in, Mr Low said.

"Absolutely there already people who can't afford premium steaks but they are going to other cuts and using different cuisine types - they are still regularly consuming beef," he said.

Mr Strong said being seen as expensive was not new for beef.

Consumer insight work shows price is a dominant driver for people to consider eating less beef but going back ten years, that was the same, he said.

"But since then, we've developed a more consistent product with more credentials," Mr Strong said.

"We are giving people more reasons to eat beef. Yes, it's an expensive product but there are reasons for it."