R&D Vital to ‘Stay Ahead of the Pack’

Is the Australian live export sector competitive? Profoundly so, according to market analyst Peter Barnard, who spoke at last week’s LIVEXchange conference in Darwin.

One positive indicator: Australia has been live exporting since 1829. Longevity suggests that the industry is doing something right.

Another indicator: despite Australia’s high-cost environment, Australian cow-calf operations have some of the lowest costs in the world.

Australian meat is given peerless access to markets around the world. Last year, Australian livestock products were shipped to 150 countries.

And this island-continent, once thought to be remote from the economic centres of Europe and North America, now finds itself at the doorstep of the world’s new economic centres.

But Dr Barnard observed that Australia is competitive because, on-farm at least, it’s at the top of its game – and it’s very hard to improve on best practice.

Other countries have ground to make up on Australia, which is why Australia needs to look hard at how to stay ahead.

It’s time, Dr Barnard argues, for Australia to reverse the shrinking of its research and development capacity.

In this period of respite from immediate competition, the livestock industries need to swing back into investing in the technologies and systems that will drive future productivity growth.

That includes doubling down on biosecurity. Modelling suggests an outbreak of foot-and-mouth disease could cost the industry $55 billion over a decade.

Nor can the livestock industries neglect “social licence” on issues like animal welfare or environment, Dr Barnard said.

Meat is already being positioned by opponents as something of a consumer pariah, and that erosion of trust will continue without counter-signals from the industry.

Cost of doing beef business in Australia

On-farm, Australian farmers produce cattle on some of the lowest costs of any beef production system in the world.

Once a beast leaves the farmgate, though, competitiveness is eroded by the costs built into the processing sector.

Australia is an expensive place to live and do business, and the regulatory system that underpins the reputation of our livestock products overseas adds an extra layer of overhead.

Peter Barnard laid out that nature of those costs in a slide at the LIVEXchange conference.

When it comes to processing cattle, Australian costs are:

• 2.4 times higher than the United States
• 3.0 times higher than Brazil
• 1.5 times higher than New Zealand

Wages for a skilled meatworks boner are:

• Australia: $30/hour plus 40-42 per cent on-costs = $43/hour
• US: $15/hour plus 20pc on-costs = $18/hour
• New Zealand: $16/hour plus 25pc on-costs = $20/hour
• China: $5/hour

Addressing these post-farmgate costs will be essential if Australia is to boost its competitiveness against the rest of the world, Dr Barnard said.