… The summary below looks at the consequences of ‘no feed, no water’ for Australia on the female kill and the size of the national beef herd; beef exports; cattle prices and potential plant closures… 



‘No feed, no water’ and the grim reality of potential beef plant closures

Independent meat and livestock analyst Simon Quilty provides his summary of the current state of play in the once-in-a-century drought, and what lies ahead for cattle supply, herd size, beef exports and processor viability…


Simon Quilty, BEEF Central (Australia) 

March 14, 2019


THE Australian beef industry is killing its future, as we speak. The high liquidation of females and the increased production due to lack of feed and water is making life impossible for many farmers.


And for many beef processors, when rain comes it will make life impossible for them as well. In reality there are no winners in the long-term with a drought as severe as this.


The uniqueness of this drought has been the record temperature months in April last year, and December and January this year which has ‘cooked’ the pastures and robbed animals of stock water in many regions’ as described to me a by a feed expert.


As a result we have seen an exodus of cattle from the system which I believe will ultimately see an Australian herd of close to 25.5 million head by the end of 2019.


The sobering fact is that without cattle, abattoirs run at much lower processing throughput for extended periods or there are plant closures (or a combination of both).


The lethal combination of low throughput and high cattle prices following a drought-breaking event can lead to a difficult processing environment.


The summary below looks at the consequences of ‘no feed, no water’ for Australia on the female kill and the size of the national beef herd; beef exports; cattle prices and potential plant closures.


There are few winners and losers in a drought like this. Farmers today are suffering and when rain eventually comes it will be processors who will be the next to feel the pinch due to lack of livestock and throughput. It’s an unenviable situation.


Any contraction in processing capacity for the farming sector means less competition for their livestock in the long-term. I truly hope it does not come to this, but I think it’s inevitable.


Australia’s herd liquidation continues


The January ABS kill figures were released on Friday, highlighting the ongoing liquidation of the Australian herd. The female kill was at 50.7pc, which is well above the ten-year average of 47pc and reconfirms that Australia’s breeding herd continues to be decimated as the drought continues to have a major impact.


This to me places this current drought as the most severe we have experienced in recent history.


Significant herd size fall expected


When assessing the impact of the last 13 months compared to previous droughts, the average female kill since 2018 was at 51pc, which is higher than the female kill ratio of the last three previous droughts for the same 13-month window.


In 2014/15, the female kill ratio was at 50pc at this stage in the drought, which saw the herd fall 5.8pc that year. It would not be unfair to assume that Australia’s herd size estimated in June 2018 at 27.6 million head is likely to fall by at least 6pc by June 2019, to 25.94 million head.


When flood losses of at least 350,000 head (some suggest 500,000 head) in northern Australia last month are added, this puts the herd at 25.5m head – a 25-year low in herd size.


Large cattle kills lead to larger beef shipments ...  


US shipments ...


Weather update – looking at previous extreme dry weather trends ...


Cattle prices are crashing – ‘no feed, no water’ ...


Potential beef plant closures ...


Which plants will shut, which will remain open? ...


more, including tables, charts