State of the Industry Report 2020

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State of the Industry Report 2020 STATE OF THE INDUSTRY REPORT The Australian red meat and livestock industry Meat & Livestock Australia acknowledges the contribution of EY in compiling this report. Disclaimer – MLA makes no representation as to the accuracy of any information or advice contained in this document and excludes all liability, whether in contract, tort (including negligence or breach of statutory duty) or otherwise as a result of reliance by any person on such information or advice. CONTENTS 4 Executive summary 5 The operating environment The industry environment 6 Production of livestock 7 Consumption of red meat 8 Key export and import players The economic importance of the Australian red meat and livestock industry 9 Industry turnover 10 Industry value add 12 Employment 15 Number of businesses 16 Exports Species statistics and performance 17 Beef cattle 21 Sheep 24 Goat 25 Alternative proteins 26 Key issues snapshots 38 Glossary and key terms Executive summary The Australian red meat and livestock industry faced one this, industry turnover of red meat and livestock recorded of the most challenging years on record in 2019, as a a notable increase over the same period, while industry myriad of pressures unfolded, in domestic and value add and employment levels in the red meat sector global markets. remained stable at a time when the industry was suffering one of the worst droughts on record. Drought conditions intensified across the eastern states, with the Bureau of Meteorology officially declaring 2019 The 2020 annual update to the beef sustainability as the hottest and driest year on record in Australia. framework demonstrates the progress the industry has Cattle and sheep producers were forced to destock made to improve its sustainability – these include in the paddocks, driving the national herd and flock to historical areas of biosecurity, the increased use of pain relief, lows and the national bushfire crisis further tested the compliance with Australian standards for chemical resilience of Australian red meat producers. residues and reduced water usage. A steering committee was formed to develop the sheep sustainability Despite these challenges, Australian red meat continues framework, due to be released in the second half of 2020. to be recognised as the high quality protein of The important work to achieve the target of CN30 is choice worldwide. progressing through a suite of research, development While domestic consumption of red meat has steadily and adoption initiatives. declined over the past two decades, Australia remains The impact of COVID-19 has been unprecedented and one of the world’s largest consumers of beef and has caused a slowdown in the global economy, with sheepmeat, with per capita consumption sitting well Australia already experiencing the first signs of an above the global average. Australia was the largest economic recession. Heightened uncertainty and exporter of sheepmeat and second largest beef exporter volatility in the global marketplace have seen a shift in in 2019, accounting for nearly a quarter of total red meat consumer needs and purchasing behaviour throughout traded. China’s position as a key market for Australian 2020, with an increased number of consumers seeking meat continued to grow, with the outbreak of African products that are deemed trustworthy, healthy and of a Swine Fever (ASF) driving demand for protein to high quality. While the long term economic impact of the market. COVID-19 will no doubt be severe, Australia’s standing as The number of red meat and livestock businesses in a provider of high quality red meat product, both Australia has remained relatively stable over the past five domestically and globally, has somewhat sheltered the years, with a minor decline reported in 2018–19. Despite sector from the worst of the economic fallout. 4 The operating environment ENVIRONMENT OPERATING Australia has a Australia is a Global meat Australia’s per ENVIRONMENT INDUSTRY small proportion key exporter in consumption is capita beef and of the world’s global red meat increasing sheepmeat cattle and sheep markets consumption inventory Over the past 20 years, continues to be total global consumption In 2019, Australia was one of the of meat has been the second largest beef Around 2% of the global steadily increasing at an largest in the exporter, after Brazil IMPORTANCE ECONOMIC cattle herd in 2018 average annual rate of 1 (DAWE, IHS Markit). world (ABS, FAO). 1% for beef, 2% for Australia was the world’s sheepmeat, 2% for pork Around 6% of the global largest sheepmeat and 4% for poultry sheep flock in 2018 Australian per capita exporter in 2019 (OECD-FAO). (ABS, FAO). consumption of beef (DAWE, IHS Markit, Comtrade). In Australia, plant-based was approximately 25kg Australia was the world’s protein consumption in 2019, compared with a largest goatmeat accounts for 0.3% of global average of 14.6kg exporter in 2017 fresh meat volume sales, (ABS, DAWE, OECD-FAO). STATISTICS AND PERFORMANCE AND STATISTICS (DAWE, FAO). compared to red meat Australian per capita which makes up over a In 2019, Australia consumption of third of total volume exported more than 1.3 sheepmeat was of sales million live cattle and 1.1 (Nielsen Homescan, approximately 6.8kg in million live sheep 52 weeks to 17 May 2020). 2019, compared with a (DAWE). global average of 1.3kg (ABS, DAWE, OECD-FAO). KEY ISSUES SNAPSHOTS ISSUES KEY GLOSSARY AND KEY TERMS 1 Domestic meat consumption is measured by removing the portion of exports (DAWE data) from total production (ABS data) and assuming the difference is consumed (or at least disappears) domestically. Imports are also added to domestic consumption when present. Per capita consumption is calculated by dividing domestic consumption by ABS population data. Please note that domestic per capita consumption is entirely a supply statistic and does not take account of waste or non-food uses of livestock meat products. 5 The industry environment PRODUCTION OF LIVESTOCK Global and Australian herd and flock size Figure 1. Global cattle herd and sheep flock • The global cattle herd was 1.49 billion head in 2018 1.5 (FAO). (see Figure 1) 1.4 • The global sheep flock was 1.21 billion head in 2018 1.3 (see Figure 1) (FAO). 1.2 • Australia accounts for a small proportion of the world’s billion head 1.1 herd and flock, approximately 2% of the global cattle herd 1.0 and 6% of the global sheep flock (ABS, FAO). 0.9 2011 2017 2013 2014 2018 2012 2015 2016 2019 2001 2010 2007 2003 2004 2008 2002 2005 2 2006 2009 • Australia’s cattle herd was 24.7 million head at June 2000 2019 and the sheep flock was 65.7 million head2 Cattle Sheep (see Figures 2 and 3) (ABS). Source: FAO Figure 2. Australian cattle herd Production • Global beef and veal production was 67.35 million tonnes 30 cwe in 2018 (see Figure 4) (FAO). 25 • Global sheepmeat production was 9.78 million tonnes 20 cwe in 2018 (see Figure 4) (FAO). 15 10 • Australia accounted for approximately 4% of global beef million head 5 production and around 7% of global sheepmeat 0 production in 2018 (ABS, FAO). 2011 2017 2013 2014 2018 2012 2015 2016 2019 2001 2010 2007 2003 2004 2008 2002 2005 2006 2009 • Australia produced 731,281 tonnes cwt of lamb and 2000 Source: ABS mutton and 2.4 million tonnes cwt of beef and veal in 2019 (ABS). Figure 3. Australian sheep flock 120 100 80 60 40 million head 20 0 2011 2017 2013 2014 2018 2012 2015 2016 2019 2001 2010 2007 2003 2004 2008 2002 2005 2006 2009 2000 Source: ABS Figure 4. Global beef and sheepmeat production 80 70 60 50 40 30 20 million tonnes cwe 10 0 2011 2017 2013 2014 2018 2012 2015 2016 2001 2010 2007 2003 2004 2008 2002 2005 2006 2009 2000 Beef Sheepmeat Source: FAO 2 Please note, in 2015–16 the ABS survey structure changed which removed small farm businesses (estimated value of agricultural operations <$40,000) from livestock populations. This change has meant some livestock previously included in the survey are now excluded. For the purpose of this report, official ABS data has been used. This figure differs from MLA’s Cattle and Sheep Projections, which seek to estimate herd and flock numbers from all farm businesses. 6 CONSUMPTION OF RED MEAT ENVIRONMENT OPERATING Global consumption Figure 5. Total global meat consumption • Over the past 20 years, global consumption of meat has 350 been steadily increasing (see Figure 5). Total global consumption increased at an average annual rate of 1% 300 for beef and veal, 2% for sheepmeat, 2% for pork and 4% 250 for poultry (OECD-FAO). 200 • In 2019, sheepmeat accounted for 5% of total global meat 150 consumption (excluding seafood), while beef and veal million tonnes INDUSTRY ENVIRONMENT INDUSTRY accounted for 21%. Poultry and pork accounted for 36% 100 and 38%, respectively (OECD-FAO). 50 Domestic consumption 0 2011 2017 2013 2014 2018 2012 2015 2016 2019 2001 2010 2007 2003 2004 2008 2002 2005 2006 2009 • There has been a steady decline in Australia’s per capita 2000 consumption of red meat over the last two decades. Beef and veal (cwe) Pork (cwe) Poultry meat (rtc) Despite this, Australia remains one of the world’s largest Sheepmeat (cwe) consumers of beef, with per capita consumption in 2019 Source: OECD-FAO averaging 25kg3 (see Figure 6) (ABS, DAWE, MLA calculations). Figure 6. Australian per capita meat consumption - fresh and • In recent years the retail price for lamb has climbed processed IMPORTANCE ECONOMIC higher, however Australia continues to be one of the 50 largest per capita consumers of sheepmeat in the world. In 2019, Australian per capita consumption of sheepmeat 40 declined to 6.8kg (see Figure 6) (ABS, DAWE, MLA calculations).
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