FEATURE ARTICLE: BEEFING UP OUR ECONOMY: MEAT PRODUCTION IN SOUTH AUSTRALIA


INTRODUCTION

Australia is among the world’s largest producers of red meat and is the second largest exporter of both beef and sheep meat behind Brazil and New Zealand respectively. (Australian Bureau of Agricultural and Resource Economics (ABARE) 2009a; 2009b). Whilst South Australia is not one of the big players on the national or international stage, meat production makes an important contribution to the state economy. Total meat production (including poultry) in the year ending 30 June 2009 was estimated at $1,018.2m which represented 23.1% of the gross value of agricultural production in South Australia ($4,407.5m).

Cattle, sheep and pigs are the main livestock grown in South Australia. Beef has accounted for the largest proportion (volume) of red meat production in South Australia for much of the past three decades, although since 1999 this dominance has been challenged as the production of lamb and pig meat has increased. The respective strategic direction plans of the main red meat commodities each contain targets which relate to growing the value of their industries. Specific targets outlined in the '2005-2015 Beef Industry Strategy' include a 5% increase in domestic consumption; a 30% increase in processed exports; and a 40% increase in the volume of processing over the 2002-03 level by 2015. (Primary Industries and Resources South Australia (PIRSA) 2005). Quantifiable targets in the 'South Australian Sheep Industry 10 Year Strategic Plan' include expanding the volume of sheep meat production to 160mkg by 2012 and growing the value of produce to $1.5b. (PIRSA 2004a)

Using data from a variety of sources within the suite of ABS Agricultural publications, this article presents an overview of red meat production in South Australia over the last three decades. An analysis of the State’s livestock and slaughtering numbers will be followed by discussion of the volume and composition of red meat production. The geographic location of South Australia’s meat producers and the contributions these regions make to the respective livestock groups will conclude the article.


LIVESTOCK NUMBERS & SLAUGHTERING

Sheep

In 1979 there were approximately 14.9 million sheep in the South Australian flock and by 1990 this number had increased to approximately 18.4 million. Over the ensuing five years, however, the size of the flock decreased markedly as a result of adverse wool prices and drought conditions. The subsequent five year period of comparative stability was followed by a decade of general decline. In addition to poor seasonal conditions, sheep, traditionally prized for their fleece, were now more valuable as a meat commodity. As a result, sheep numbers fell to approximately 10.0 million by 2009, the lowest level since 1950 (9.5 million).

South Australia accounted for 11.1% of Australia's sheep in 1979 and 13.7% in 2009 indicating that the South Australian flock has been reducing at a slower rate than in other states.

Cattle and Pigs

South Australia's beef herd is much smaller in number than sheep and accounts for a relatively small share of the national beef herd; 4.2% on average between 1979 and 2009. At the start of the period, there were approximately 900,000 head of meat cattle in the state and, primarily due to the intense drought of 1982-83, this number had dropped to 650,700 by 1984. By 2005, despite a reduction in the available grazing area, the herd had increased by 88% and numbered 1,223,400 head. Drier weather conditions and Queensland looking to source quality breeding cows from other states to rebuild their own herd (PIRSA 2005) contributed to herd numbers in South Australia falling back to approximately one million head in 2009.

Pig numbers in South Australia have remained relatively stable throughout the analysis period. As pigs are generally grown in sheds, pig farming is somewhat less susceptible to drought. Even though numbers are small, the state’s herd accounted for 15.7% of Australia’s pig herd, on average, between 1979 and 2009.

Slaughtering

Slaughter rates are influenced by a number of factors including drought, demand for breeding stock, feed prices, sale yard prices and production demand. In times of drought, when the availability of good pasture and water is low, farmers are often forced to choose between paying the higher price for feed or slaughtering stock in order to get some return.

A rise in the number of sheep, lambs and cattle slaughtered around the time of the 1982-83 drought is evident in the graph below. The decline in livestock slaughtering in the period(s) immediately after this drought (particularly evident for sheep) could be reflective of farmers looking to rebuild their herds.

The number of lambs slaughtered per quarter has increased markedly over the last decade rising from 528,100 in the March quarter of 1999 to 997,600 in the June quarter 2009; an increase of 88.9%. This number has fallen for the last four quarters to be 926,100 in June 2010. At the same time the number of (older) sheep slaughtered has fallen from 483,900 in March 1999 to 209,300 in June 2010; a decrease of 56.7%. These movements could be reflective of poorer wool prices, rising prices for lamb and a change in the composition of the overall sheep flock.

As mentioned in the previous section, pig farming is not as vulnerable in times of drought as other livestock commodities. Possible factors behind the increase in the number of pigs being slaughtered since the December quarter 1997 could include better prices, increased demand for pig meat and more efficient production practices.

MEAT PRODUCTION TRENDS

Between the September quarters of 1979 and 2007, South Australia produced more tonnes of beef (including calves) than any other type of meat; an average of 22,200 tonnes per quarter. However, in the periods following the drought of 2006-07, beef production fell with all estimates in 2008 below 20,000 tonnes, the lowest of which occurred in the September quarter (18,000 tonnes). The level of beef production recorded in the March quarter of 1999 (15,100 tonnes) was the lowest in the analysis period.

The contribution of lamb and pig meat to total red meat production began to increase in the mid 1990s. By the December quarter 2007, the volume of lamb and pig meat produced had more than doubled from 8,538 tonnes and 7,677 tonnes in June quarter 1995 to 21,700 tonnes and 21,400 tonnes respectively and as a result, lamb and pig meat production exceeded beef production (21,000 tonnes) for the first time. Lamb and pig meat also recorded falls throughout 2008 but production levels remained above beef for most of the year.

The production trends for sheep, lamb and pig meat follow similar patterns to those depicted in the previous section discussing slaughtering. By contrast, beef production has been quite variable when compared to relatively stable rates of slaughter. This may indicate a high number of cattle leave the state to be slaughtered elsewhere or, as cattle are generally larger animals than the other livestock, there is more variability in the weight of the carcass.

In the June quarter 2010, South Australia produced 4.9% of Australia's beef (incl. calves), 21.3% of Australia's lamb (excl. sheep) and 26.1% of Australia's pig meat.

VALUE OF PRODUCTION BY STATISTICAL DIVISION

There is more than one way to measure the contribution meat production makes to the South Australian economy. For the purposes of this analysis the direct measurement available, gross value of agricultural production, will be used. The estimate is determined by the value placed on recorded production at the wholesale prices realised in the market place (ABS cat 7503.0). For the year ending 30 June 2009, the gross value of agricultural production in South Australia was $4,407.5m. Total meat production, or 'Livestock slaughterings and other disposals' (comprised of the value of livestock slaughtered plus the value of net exports) contributed 23.1% of this total ($1,018.2m)

"The economic importance of the (red) meat industry is more significant at the regional level where farming, particularly livestock production, comprises a large proportion of total economic activity." (ABARE 2009b) Meat production is undertaken in every statistical division (SD) in the state albeit to varying degrees. The South East SD accounted for a quarter (25%) of the value of all meat production in the state in 2008-09 whilst the Adelaide SD only contributed 2.4%.

At the commodity level the South East SD dominates both cattle and sheep production accounting for 53.1% and 26.7% of the respective commodity values. Other SDs, such as Eyre are generating value in one main commodity (in this case, sheep) with almost no contribution to the other.

South Australia's Pig industry produces more than a quarter of Australia's pig meat (26.1%) but an estimate of the value of pig slaughterings is not available separately. However, based on the distribution of the state's pig herd and the location of processing plants at Murray Bridge and Port Wakefield, it would be expected that most of the production would occur in the Murray Lands (37.2% of all pigs), Outer Adelaide (28.5% of all pigs) and Yorke and Lower North (24.7% of all pigs) statistical divisions.


SUMMARY

Accounting for almost a quarter (23.1%) of the total gross value of South Australia's agricultural production in 2008-09, red meat production makes an important contribution to the state's economy. Cattle, sheep and pigs are the main livestock grown in the state and the industry specific strategic direction plans developed for each commodity contain targets to facilitate future growth.

Livestock holdings can be influenced by a number of factors. Multiple periods of drought as well as a reduction in the value of, and demand for, high quality wool resulted in the number of sheep in the South Australian flock falling to its lowest level since 1950. Once valued for their fleece, more lambs are now being slaughtered for their meat.

Historically beef has accounted for the largest share (in volume terms) of meat produced in South Australia, averaging 22,200 tonnes per quarter between 1979 and 2007. However, since the mid 1990s the amount of lamb and pig meat being produced has been increasing thereby changing the composition of total red meat production in the state.

Demonstrating an ability to recover from drought, beef production began rising again from the December quarter 2008 and has been accounting for the largest share of red meat production since mid 2009.

In the June quarter 2010, South Australia produced 4.9% of Australia's beef (incl. calves), 21.3% of Australia's lamb (excl. sheep) and 26.1% of Australia's pig meat.

Livestock production makes up a large proportion of the economic activity undertaken in regional South Australia. Meat production is undertaken in every statistical division (SD) in the state albeit to varying degrees. The South East SD accounted for a quarter (25%) of the value of all meat production in the state in 2008-09 whilst the Adelaide SD only contributed 2.4%.

At the commodity level the South East SD dominates both cattle and sheep production accounting for 53.1% and 26.7% of the respective commodity values. The Statistical Divisions of Murray Lands, Outer Adelaide and Yorke and Lower North hold 90% of the state's pig herd and would therefore account for most of the value in this commodity.

REFERENCES

ABS 2010, Livestock Products, Australia, June 2010 (cat. no. 7215.0)

ABS 2008-09, Agricultural Commodities, Australia, 2008-09 (cat. no. 7121.0)

ABS 2008-09, Value of Agricultural Commodities Produced, Australia, 2008-09 (cat. no. 7503.0)

ABS 2007-08, Historical Selected Agriculture Commodities, by State (1861 to present), 2007-08 (cat. no. 7124.0)

Australian Bureau of Agricultural and Resource Economics (ABARE) 2009(a), Australian commodity statistics

ABARE 2009(b), The value of the red meat industry to Australia, S. Fletcher, B. Buetre, K Morey

Bureau of Meteorology, Drought Statements, http://www.bom.gov.au/climate/drought/archive/ viewed 18 June

Meat and Livestock Australia, Live Export Statistics, http://www.mla.com.au/Prices-and-markets/Trends-and-analysis/Beef/Live-exports viewed 18 June

Primary Industries and Resources SA (PIRSA) 2005, Beef Industry Strategy 2005-2015: directions for South Australia

PIRSA 2004(a), South Australian Sheep Industry: 10 year strategy plan

PIRSA 2004(b), The South Australian Pork Industry's Strategic Plan for 2010