Good times haven't stopped long-term decline in herd and flock

One of the best runs of excellent seasonal conditions and record livestock prices that the beef and sheep industries have ever experienced has failed to significantly turn around the long-term decline in the herd and flock size.

At the same time, milk prices are at records and the dairy herd remains in liquidation.

There is a quiet, but persistent, shift in land use underway that is more likely to change the shape of the livestock game in Australia than any form of global market upheaval or exotic disease outbreak.

International meat market guru Simon Quilty, Global Agritrends, says the changes are profound.

Fundamental shifts in what the younger generation of those on the land want to do with their lives, a systematic lack of labour to work farms, perceived risk particularly around social licence and climate resilience and non-stop increases in input costs and regulation are driving cattle and sheep people out or fuelling a move into other farming pursuits.

Alongside that, grazing country is being sold or moved into forestry, conservation, indigenous management and even the defence force.

The latest data from the Australian Bureau of Statistics tells a damning story.

Beef herd growth last year was 0.9 per cent and the dairy herd declined by 10pc, giving a net effect of a 0.13pc decline in Australia's cattle herd.

"These are the good times - rich pastures everywhere, two years of a record cattle market and record milk solid prices of $9 to $10 a kilogram prices, yet it's a rush to the exit door for dairy and the beef herd has increased by a meagre 0.9pc," Mr Quilty said.

"Why?

"Every state is different but the answer lies in the battle for land use."

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The engine room of Australia's beef industry, Queensland - which is home to 45pc of the cattle population - is desperately trying to get out of first gear on the rebuild, with a herd increase of only 1.4pc last year.

However, Queensland sheep numbers lifted by 35pc in the 2022 financial year.

The marginal areas of Queensland are now in sheep and goats, Mr Quilty said.

"The other critical development was exclusion fencing which has kept wild dogs and dingoes at bay and enabled regions that were once believed to be too risky due to predators for sheep and goats to be capable of running these animals," he said.

"The drought of 2018/19 taught Queensland pastoralists that the cost of keeping cattle in these regions was enormous, so once sheep and goats became manageable, the switch was made.

"This is a structural change, and this trend is likely to continue.

"Dry conditions again will only see Queensland cattle numbers fall, but this time from a lower base."

Further, Queensland grazing land is being taken for other uses, Mr Quilty said.

The ABS figures on Queensland show cropping land expanded by 8pc in the 2022 financial year and sorghum production jumped by 60pc. Almost two-thirds of Australia's sorghum is now produced in Queensland.

NSW, however, is the state that is potentially the most vulnerable, according to Mr Quilty.

"The most recent ABS data shows that NSW agriculture land usage fell by 2pc, less than the national average of 5pc. Still, it highlights again the challenges for Australia's agricultural sector being outcompeted by non-agricultural interests," he said.

NSW cropping land increased from the previous year by 5pc even though most NSW grains production was down, with wheat down 7.3pc and oats 46pc.

"It would be fair to say that cropping is likely to continue expanding in NSW," Mr Quilty said.

The critical lesson from the 2019 drought for NSW livestock producers was the challenges for fodder conservation in the north, he said.

"The heavy reliance on the feedlot sector and its role in drought mitigation has become more challenging due to the long-fed programs of Angus and Wagyu cattle - which effectively has seen the 'feedlot inn' almost full due to contractual commitments.

"This highlights how precarious livestock production is in NSW when extreme dry conditions occur."

In Victoria, dairy herd numbers fell 10.8pc last year, according to the ABS, yet beef herd growth was only a moderate 2.6pc - despite widespread talk of the shift from dairy to beef.

The two big drivers, according to Mr Quilty, are the need for more labour to run dairies and the next generation of milk producers walking away.

He said other factors, such as high input costs and recent flooding in the Murray River milk catchment area, have added to the exodus.

"I am surprised that the beef rebuild has been so slow given the excellent growing conditions and the switch by many in the dairy sector to beef but, once again, competing land use lies at the heart of the slow rebuild, with 6pc of Victorian agricultural land moving into other uses in the last financial year," Mr Quilty said.

"Many farmers are waiting to see if breeder prices fall before they step back in but the issue is that there are plenty of others doing the same thing. Will there be enough breeders?"

The liquidation of Western Australia's sheep flock continued in the last financial year, with numbers falling a further 2.3pc.

The closure of the live sheep trade in the next two years, the lack of labour in the wool industry and a return to cropping are among many reasons for this decline, Mr Quilty said.

"The real surprise here has been the 6.1pc fall in cattle numbers during the 2022 financial year," he said.

"There has been a dramatic slowdown in live exports in the last year, and once again, a switch to cropping could be part of the answer."

The ABS data shows an additional 5pc of cropping land in that period, with more than half sown to wheat.