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The Australian Buffalo Industry Market Research and Feasibility Study

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The Australian Buffalo Industry Market Research and Feasibility Study COOPERATIVES DEVELOPMENT FUND The Australian Buffalo Industry Market Research and Feasibility Study A report for the Rural Industries Research and Development Corporation and Registry of Co-Operatives Department of Fair Trading by Janet Robertson, Ian Flack, Peter Smetana August 1999 RIRDC Publication No 99/71 RIRDC Project No BUF-1A © 1999 Rural Industries Research and Development Corporation. All rights reserved. ISBN 0 642 57903 2 ISSN 1440-6845 The Australian Buffalo Industry – Market Research and Feasibility Study Publication no. 99/71 Project no. BUF-1A The views expressed and the conclusions reached in this publication are those of the author and not necessarily those of persons consulted. RIRDC shall not be responsible in any way whatsoever to any person who relies in whole or in part on the contents of this report. This publication is copyright. However, RIRDC encourages wide dissemination of its research, providing the Corporation is clearly acknowledged. For any other enquiries concerning reproduction, contact the Publications Manager on phone 02 6272 3186. Researcher Contact Details Mrs Janet Robertson Mr Ian Flack Mr Peter Smetana Tara Ian Flack Consultant QUGEA Pty Ltd Tooraweenah NSW 2831 1 Frances Terrace 7 Pindari Road MOSMAN PARK WA 6012 CITY BEACH WA 6015 Phone: (02) 6848 5315 Phone: (08) 9384 2285 Phone: (08) 9385 7706 Fax: (02) 6848 5359 Fax: (08) 9384 8585 Fax: (08) 9385 7706 Email: Email: [email protected] [email protected] RIRDC Contact Details Rural Industries Research and Development Corporation Level 1, AMA House 42 Macquarie Street BARTON ACT 2600 PO Box 4776 KINGSTON ACT 2604 Phone: 02 6272 4539 Fax: 02 6272 5877 Email: [email protected] Website: http://www.rirdc.gov.au Published in August 1999 Printed on environmentally friendly paper by Canprint ii Foreword The Australian Buffalo Industry is concentrated in the Northern Territory with smaller herds existing in most States. Since the considerable herd reduction in the Northern Territory due to the Brucellosis and Tuberculosis Eradication Campaign a small Australian domestic market has been developed for high quality Buffalo meat derived from young animals. Producers saw a need for research in to the market potential for Buffalo products and the ability of the industry to supply identified markets within an adequately funded marketing structure, which serviced customers and producers. This publication examines the availability and development of markets for young Buffalo meat and hides, price structures, the role of competitors and the ability of the industry to supply the required product in the processed form as required by the market and in compliance with statutory requirements. It also examines possible meat marketing systems, industry structures and a business plan, which would be required by a viable and developing industry. This report, a new addition to RIRDCs diverse range of almost 400 research publications, forms part of our New Animal Products R&D program, which aims to accelerate the development of viable new animal industries. Most of our publications are available for viewing, downloading or purchasing online through our website: • downloads at www.rirdc.gov.au/reports/Index.htm • purchases at www.rirdc.gov.au/pub/cat/contents.html PETER CORE Managing Director Rural Industries Research and Development Corporation iii ACKNOWLEDGEMENTS The consultants wish to thank Producers, all sections of the Meat Industry, Public Relations Consultants, Officers of Government Departments and Instrumentalities and others who have given generously of their time and expertise. They are listed individually in Schedule 1 of this Study. Acknowledgement is made of financial assistance for this study from the Rural Industries Research and Development Corporation and the Department of Fair Trading in New South Wales. iv TABLE OF CONTENTS Page No Foreword ii Acknowledgements iii Executive Summary vii Introduction 1 Objectives 2 Part 1 – Buffalo Market Research 2 Part 2 – Buffalo Industry Feasibility Study 3 Methodology 4 Consultation with Producers 4 Assessment of Current and Potential Demand For Buffalo Meat 4 Hides 5 Assessment of Beef Substitution 5 Abattoirs and Processors 5 Packaging, Labelling, Quality Assurance and Health Requirements 5 Image Creation Required to Secure Markets 6 Buffalo Industry Structure 6 Results (for Part 1 – Buffalo Market Research) 7 A. Market Potential of Buffalo Products 7 1 Carcasses 7 2 Comments by Buffalo Meat Marketers/Potential Marketers 9 3 Hides 10 4 Meat from Older Animals Outside the Tenderbuff Specification 11 B. Analysis of Domestic Buffalo Meat Market 11 5 Market Demand and Prices Prevailing 11 6 Current Levels of Supply / Availability 15 7 Estimates of Demand Growth to 2005 15 8 Margin Analysis of Supply Chain 21 9 Assessment of Extent of Beef Substitution, Its Effects on the Buffalo Market and Recommendations on How it May be Addressed 25 10 Export Markets Identified During the Consultancy 26 11 Transport of Live Animals and Processed Products to Markets 26 12 Abattoirs which can Serve Markets for Buffalo 27 13 Processors able to Provide Necessary Product Range 32 14 Package and Labelling Requirements 32 Conclusions (for Part 1 – Buffalo Market Research) 33 Recommendations (for Part 1 – Buffalo Market Research) 35 v Buffalo Industry Feasibility Study (Part 2) 37 A. Buffalo Meat Marketing System and Structure 37 1 List of Buffalo Producers in Australia 37 2 Recommended Marketing Structures 37 3. Analysis of Buffalo Producer Survey Results 46 B. Buffalo Product Business Plan 55 1 Business Plans 55 2 Funding Opportunities 61 References 63 Schedule 1 Persons Who Have Assisted in the Study 64 Schedule 2 Buffalo Producer Survey 68 Schedule 3 Australian Buffalo Industry Contact Details 74 Schedule 4 Details on the Establishment and Features of NSW Co-Operatives 78 RIRDC Related Publications 138 vi EXECUTIVE SUMMARY Background The Australian Buffalo Industry has been centred on the Northern Territory with product exported live or processed and exported as manufacturing meat and hides or sold on the domestic market. This trade has dropped to small quantities in recent years since the Brucellosis and Tuberculosis Eradication Campaign (B.T.E.C.) program reduced the herd. Breeding stock from the Northern Territory have been sold to producers in the Southern States and identified herds exist in Western Australia, South Australia, New South Wales, Victoria and Tasmania. Most of these are less than 20 animals although a few producers have herds in excess of 50 animals. A market for meat derived from Buffalo (Tenderbuff) less than 30 months old and complying with quality assurance standards of weight, pH, fat thickness and accelerated conditioning has been developed in the Northern Territory for small numbers of carcasses. Southern States producers attempted to develop markets for similar animals. However, apart from a trade, centred on the Queensland Tourist Industry, all sales are small and adhoc. A major difficulty, which all producers face, is marketing the majority of the carcass after the fillet, striploin and possibly the cube roll and rump have been sold. Objectives Objectives contained in the terms of reference provided by Buffalo Producers NSW Inc on behalf of the industry are shown below. To determine the short, medium and long term viability of the Australian Buffalo Industry the principal outcomes required of the study are: - • Assessment of the current and future domestic markets for Buffalo products. • An assessment of the economic feasibility of Water Buffalo production in Australia based on the domestic market for its products. Methodology The consultants conducted a written survey of 118 identified Buffalo producers regarding supply and handling of livestock, markets, specifications and industry structure. Meetings were held with Buffalo producer organisations and visits made to Buffalo properties. A liaison structure was set up between the consultants and Mrs Janet Robertson representing the industry. vii Meat industry organisations, meat traders, wholesalers, retailers, consultants were interviewed in order to assess current and potential demand for Buffalo meat. Discussions were held with C.S.I.R.O. and the Skin and Hide Industry to assess demand for Buffalo hides and leather. Discussions were held with operators of abattoirs, boning rooms, transporters and processors to determine if there was any interest in handling Buffalo and if so the costs and special conditions to provide the service. Relevant government authorities were consulted on matters of substitution, packaging, labelling, quality assurance, health requirements and the formation of co-operatives. These included Meat Industry Authorities, Health Departments, Ausmeat, A.Q.I.S., Food Science Australia and the NSW Department of Fair Trading. Market development, public relations and promotion firms, particularly those specialising in products from emerging industries were interviewed in relation to demand creation and costs involved. Results • The Market Potential for Buffalo Products A list of Buffalo products and their possible end use was compiled. This concentrated on meat and hides. A number of possible uses for non-preferred cuts were identified in the processed foods and smallgoods markets. Hide numbers available are too small for tannery operations and to replace imports. Only low prices (50% lower than cattle) were available on the export market for salted hides. Some ad hoc domestic sales have been made at higher prices. • An
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