I spent Christmas and new year in Australia catching up with relations. In this boom-bust country, which is 70% rainless desert, I found them gung ho about their beef prospects after coming through a tough time. Weanlings are currently making record prices in Queensland. In Western Australia, suckler cows are also making record prices as herd rebuilding is under way. But everything in Australia is rain-dependent.
I spent Christmas and new year in Australia catching up with relations. In this boom-bust country, which is 70% rainless desert, I found them gung ho about their beef prospects after coming through a tough time.
Weanlings are currently making record prices in Queensland. In Western Australia, suckler cows are also making record prices as herd rebuilding is under way. But everything in Australia is rain-dependent.
Australian beef exporters have majored in commodity product. But that is changing. At the 16,000-head Aranui feedlot near Dalby in Queensland, I found the following:
All of the cattle were either pure Wagyu or Wagyu crosses.Aranui is owned by the publicly quoted Australian Agricultural Co Ltd (AAC Ltd), which farms a total of over six million hectares (this is almost as big as the Republic of Ireland) and has 400,000 head of cattle.Its beef business is being integrated from the suckler cow to a branded product sold in Japan, Korea, Europe and the US (they are deliberately moving away from the domestic market, which is regarded as too volatile).The feedlot is operated according to strict licence conditions. No hormone implants are used. Apart from the bad perception of implants, their use reduces marbling, which is much sought-after in Wagyu meat.Above all, I was gobsmacked at the attention to detail given to grain processing, which made up to 50% of the Aranui feedlot ration.
“I check the rolling and crimping almost every hour to ensure the absence of fines, which can trigger laminitis and bloat, and to ensure that all grains are fully cracked for full digestion,” stressed feedlot manager David Bailey.
“Seeing grain coming through in the dung would trigger alarm here. We monitor dung to ensure that it stays under 1% starch. Also, if we get a pong from the feedlot, this is a sign of poor digestion,” he added.
Water is added to the grain to bring it to about 22% moisture before processing.
“We look for energy rather than protein and are happy at 12% protein. We rate wheat costing $330/t (€230) as 4% higher in energy than barley costing $310/t (€217),” said David.
The cattle are fed twice daily. Troughs are cleaned, either by cattle or man, once a day. Cattle are scrutinised from horseback once a day.
Between the office and yard, about 20 are employed in the feedlot. Currently, the workforce is mainly Philippine. Once it was all Irish, but big money in mining lured them away.
In other Australian feedlots geared to the home market, the cattle are pushed into gaining about 2kg/day for a fast 70-day finish. With Wagyu, the target is 1kg/day for 300 days for crossbreds and 500 days for purebreds. This is seen as optimal for promoting the marbling in the beef.
On a marbling score, the crossbreds are rated four to five and the purebreds eight to nine, which is a big hit in Japan. This contrasts with a fat Angus, which is rated at about two to three.
Wagyu beef is on a different price plane relative to other Australian cattle. Last season, non-Wagyu feeder cattle weighing 320kg to 350kg coming into a feedlot ranged from $1.50/kg to $2.20/kg (€1.04 to €1.54), depending on weather and other factors.
In contrast, the Wagyu came in at $3.30/kg to $3.40/kg live (€2.30 to €2.35) for crossbreds and $3.70/kg to $4.00/kg (€2.60 to €2.90) for purebreds. Since the start of 2015, all weanling and store cattle prices in Australia have jumped considerably.
In terms of finished beef prices, the rates being quoted to me were way higher than I would glean from the Bord Bia website for example.
In two livestock markets, I got quotes of $4.20/kg to $4.60/kg (€2.94 to €3.20, excluding VAT) for Angus cross feedlot cattle, with about 20c/kg less for grass-finished stock. Since then, beef prices have risen.
Wagyu beef is on a different price category. A consolidation of the company feedlots into the overall AAC Ltd meant that Aranui did not have an ex-feedlot Wagyu price, but the company’s annual report stated a wholesale selling price equal to $12.18/kg carcase weight (€8.15/kg) for the Wagyu product.
This contrasted with a wholesale price of $7.43/kg (€5.13) for non-Wagyu feedlot beef last year.
On the ground, the AAC Ltd markets its beef through wholesalers Zanderbergen in Holland, Broadleaf (fronted by Greg Norman) in the US and others in Japan and Korea.
In any event, the AAC Ltd has decided to switch its feedlots 100% to Wagyu beef and also to increase the usage of Wagyu bulls across its farm and station suckler herds. As it is, the company supplies about 50% of Australian Wagyu beef exports.
David Bailey is convinced that the elite markets across the world are hungry for Waygu beef. He reckons that his company could double output without any impact on price.
While the AAC Ltd may or may not be making money on its Wagyu feedlots, overall, the company has endured a difficult few years.
The annual reports show heavy losses in 2013 followed by another $13m loss in the six months up to September 2014.
Such is the volatile nature of Australian farming and its vulnerability to weather patterns that long-term plans are challenging.
But on top of the weather vagaries, Australian livestock farming was rocked to the core in late 2011 when the government banned live shipping to Indonesia following a TV programme on animal welfare in Indonesian slaughterhouses.
The ban came at the start of weanling sales and continued for six months. The AAC Ltd puts its losses from the shipping ban at $50m and has joined others in a massive compensation claim against the Australian government.
The AAC Ltd is also laying a lot of importance on a new slaughter plant, Livingstone Meats, that it has built near Darwin in the Northern Territory.
The ambition is that this will major in processing cull cow beef for the US. Currently, it costs about $200/head to transport a cull cow from Northern Territory to a slaughterhouse in Queensland. As a result, most cows are left to die on the big cattle stations (the same was true in Ireland before the advent of US boxed beef trade in the 1950s).
New investors
In May 2013, Australian mining magnate Andrew Forrestal bought Western Australia’s flagship beef slaughter plant Harvey Beef for a reported $45m. Situated 140km south of Perth, Harvey Beef exports 70% of throughput and is licensed to export to China. It has a throughput of 3,000 head/week.
In another Australian-Chinese move, V and V Walsh of South West Abattoir, WA, announced a $1bn deal with Chinese-based Grand Farm to supply 300,000 lambs and 30,000 cattle per year.
Hilton Foods, which has a beef packing plant in Drogheda, has established a joint operation with Woolworths supermarket group in Australia with new meat processing plants in Victoria and Bunbury, WA.
In addition to investing in a number of milk projects, Gina Rinehart (reputedly Austrlia’s richest person) has purchased beef stations and a large Wagyu herd in Queensland.
Woolworths is the only major supermarket group still accepting beef cattle that have been treated with hormonal implants.
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