Article:

An industry feeling optimistic: BDO at Beef Australia 2018

30 May 2018

Australia's national beef expo takes place just once every three years in Rockhampton, Queensland. Running from May 6 to 12, the event celebrates all facets of the Australian beef industry.

People Open to New Ideas and Hungry for Information.

This year's conference was marked by a positive mood across the sector, with people hungry for more information and open to new ideas.

This may partly reflect many people entering the industry later in life. Rabobank noted a trend towards people returning to family farms aged 35 plus.  This provides the opportunity for the beef industry to harness the skills of these people for the benefit of the whole industry.

New technology available

The event showcased the many new technologies entering the industry. This includes elements such as virtual fencing, drone technology and ground dung sampling (which enables earlier indications of when cattle are losing weight). Much of this technology is on the cusp of being commercially available and BDO looks forward to seeing the industry enjoy the associated productivity improvements and cost savings in the next few years.

Animal welfare and the need to tell positive stories

A key takeaway from the week surrounded the need for farmers to tell more positive stories - particularly in relation to animal welfare. A good example of a positive story was delivered during the Animal Welfare Seminar by two cattle live export stockmen. From the emotion in their voices it was clear they had a genuine concern for the welfare of animals. They were also able to highlight the huge positive gains that had been made in animal welfare.

We need to be telling these stories more loudly, using people such as the stockmen who are at the coalface. The mining industry had a huge success from adopting a such a strategy in combatting the mining tax. Mine workers, not mining company executives, were used in the media to highlight the benefits of the mining industry.

Beef farmers love their cattle and also love their land.  Farmers are working hard to ensure they use their land in a sustainable manner. The work that the Queensland government is doing on projecting long-term carry capacity of grazing properties and being able to estimate forage available on a quarterly basis, and in the future every five days, will be valuable tools for sustainable pasture management.

Investor Ready

Finally, there was an emphasis at Beef 2018 on getting investor-ready.  The need to seek the services of a trusted adviser who knows the industry inside and out was highlighted.

Where will beef go next?

Australia has a very strong competitive advantage in beef production and am convinced that there is the opportunity to establish an Ingham’s like business model within the Australian beef industry.  This would require a larger beef company to have established a market distribution network and brand, for which it receives a price premium. Smaller producers would supply cattle into the larger producer’s supply chain thereby eliminating costs and receiving a price premium from sharing in the price premium enjoyed by the larger producer.  The larger producer would benefit from having a greater volume to support its brand.  In Ingham’s business model the genetics and the production system for its contract chicken growers are controlled by Inghams.  Similarly in the beef industry, the genetics and production system could be controlled by the larger producer thereby assisting in the delivery of a consist product to consumers.

The mood is bright in Australian beef, and BDO is excited to be able to support such a thriving and exciting industry by being able to utilise its deep knowledge of the beef industry in providing its highest level taxation and financial professional services. If you think that we may be able to help with taxation advice, financial modelling, business sales, and/or debt advisory please contact me.