THE condition of the cattle industry is particularly fragile at the moment, and for various reasons ABARE has forecast that the immediate future is for a small decline in returns for producers, feeders and exporters.
But this grim picture is brightened somewhat by the news that beef imports from countries that have had a history of Bovine Spongiform Encephalitis, otherwise known as mad cow disease, will not be allowed into Australia for the next two years at least.
In recent weeks we have seen burgeoning saleyard prices for cattle. Unfortunately, the price rises are not driven by demand, but rather by lack of supply.
Torrential rain in Queensland and New South Wales in recent weeks has created an internal shortage of numbers, but the rain means many areas have the capacity to grow feed for the first time in years.
The upside for South Australian producers is that a prominent SA cattle buyer is rumoured to be trying to source up to 8000 steers for a New South Wales order.
We have seen substantial drafts of South East cattle sold to south western Queensland, and these are more than likely only the start of what should be a massive restocking of many areas to our east.
Once again, we are all playing the numbers game.
Pastoral areas of SA and the Northern Territory have received solid-to-significant rains and the flow of cattle from these regions will probably slow to a mere trickle.
Anecdotal evidence suggests that SE and western Victorian numbers are at an end, and the only major sales in sight are the annual mountain cattle dispersals at Omeo, Benambra and Ensay in Victoria, where the quality of the cattle should attract some frenetic bidding if feed-flushed graziers are serious about restocking their country and utilising their feed.
The same problem with sheep and lamb supply faces exporters. An estimated 12,000 lambs and 5000 sheep at Dublin on Tuesday is a drop in the ocean, when one exporter alone requires up to 20,000 sheep and lambs a day to fully utilise its kill capacity. Multiply that by the number of equivalent works, and the figures suggest that there has to be a huge amount of private buying occurring and many thousands of sheep and lambs going on-hook.
The recent temporary closure of Victorian exporter Castricum Bros has cast a reasonable doubt about the viability of some of our exporters at the current high prices, so more closures or reduced kills appear to be on the cards.
But there is always some good news, and the acquisition of two slaughter works in New South Wales and southern Queensland by T&R Pastoral will serve to strengthen their buying network and ensure the viability of the company.
All-in-all, despite ABARE's less-than-optimistic forecasts, it appears that for the next few years livestock producers can reasonably expect fair returns on quality stock, even if most of the demand is driven domestically.
Seasonal conditions will play a major part in the revival of many areas from the ravages of drought years. Restocking and rebuilding of flocks and herds in those areas will be a drawn-out, expensive affair.
The major problem will loom when most of Australia returns to normal stocking levels. And if export demand for beef in particular does not rise, that is when the pain may really start to bite, and the expert predictions of a gloomy future will come to fruition.
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