The most viable and profitable option for Australia's cattle industry over the short and long run is live export because:
1. Australia is one of the world's cheapest and safest (disease-free) producers of grassfed cattle (at the farmgate)
2. About 2/3rds of Australia's cattle / beef is exported - this proportion can only grow over time because Australia's beef consumption per capita has been declining for decades and Asia is growing
3. Any commodity industry that MUST sell the majority of its product into global markets MUST be a price-taker at the global price level over the long run (droughts cause short run cycles) - and the global customer can outbid the Australian customer because:
- The cost of moving cattle from farms by ship to (parts of) Asia is not materially different than moving them by road around Australia - eg. Darwin to Indonesia is about the same distance as the NT farms to feedlots in SE QLD by road
- The cost of grain feeding (fattening the young cattle from say 300Kg to 600Kg) and processing cattle in Asia is a fraction of what it is in Australia (Australia has one of the highest minimum wages in the world)
4. China is now the price-maker for Australian cattle product - its consumers are willing and able to pay much more than our traditional market of Indonesia and, more lately, Vietnam)
WLD Price at posting:
14.5¢ Sentiment: Buy Disclosure: Held
