Agrártudomány | Tanulmányok, esszék » State of the Industry, The Australian Red Meat and Livestock Industry

STATE OF THE INDUSTRY The Australian red meat and livestock industry Meat & Livestock Australia would like to acknowledge the contribution of Ernst & Young in the compilation of this report. CONTENTS 1 OVERVIEW THE OPERATING ENVIRONMENT 3 Production of livestock 4 Consumption of red meat 6 Key export and import players THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY 8 9 12 16 18 Industry turnover Industry value add Employment Number of businesses Exports SPECIES STATISTICS AND PERFORMANCE 20 Cattle 26 Sheep 30 Goat 33 APPENDIX 34 GLOSSARY AND KEY TERMS THE OPERATING ENVIRONMENT Total world meat consumption continues to increase Australia has a small proportion of the world’s cattle and sheep inventory Around 2% of the global cattle herd (ABS, FAO). Around 6% of the global sheep flock (ABS, FAO). Australia is a key player in the global meat export market The third largest beef exporter in 2017 (DAWR, IHS Markit, Global Trade

Atlas). The largest exporter of sheepmeat in 2017 (DAWR, IHS Markit, Global Trade Atlas, Comtrade). The largest exporter of goatmeat in 2016 (DAWR, FAO). Over the last two decades, total global consumption increased at an average rate of 2% per year for sheepmeat, 1% for beef, 4% for poultry and 2% for pork (excluding seafood) (OECD-FAO). Australia is one of the largest per capita consumers of beef and sheepmeat in the world1 Australian per capita beef consumption was around three times higher than the global average in 2017 (ABS, DAWR, OECD-FAO). Australian per capita sheepmeat consumption was around five times higher than the global average in 2017 (ABS, DAWR, OECD-FAO). Domestic meat consumption is measured by removing the portion of exports (DAWR 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. 1 KEY EXPORT AND IMPORT PLAYERS THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY Key industry statistics2 $65 billion $18.4 billion 82,500 businesses in 2016–17 value of industry exports5 in 2016–17 4% 5.6% 1% 11% decrease year-on-year decrease year-on-year decrease year-on-year industry turnover3 in 2016–17 (Ernst & Young, IBISWorld) industry value add4 in 2016–17 (Ernst & Young, IBISWorld) (Ernst & Young, IBISWorld) $13.3 billion decrease year-on-year (IHS Markit, Global Trade Atlas) 191,800 + 246,300 = 438,100 direct employment indirect employment total employment in 2016–17 (Ernst & Young, IBISWorld) KEY SPECIES STATISTICS Cattle • Adult cattle slaughter totalled 7.2 million head in 2017 – down 2%

on the previous year and 13% below the five-year average (ABS). •A  ustralia exported 69% of the beef and veal it produced in 2017 (ABS, DAWR). •T  he national trade steer saleyard indicator declined 4% year-onyear in 2017, to average 595¢/kg cwt (MLA). • At 30 June 2017, the Australian cattle herd was 26.2 million head6 – up 4.8% year-on-year (ABS) Sheepmeat • Lamb slaughter totalled 22.4 million head in 2017 – down 2% year-onyear, while sheep slaughter increased 8%, to 7.5 million head (ABS) •A  ustralia exported 59% of lamb and 95% of mutton that it produced in 2017 (ABS, DAWR). •T  he national trade lamb saleyard indicator increased 13% year-on-year in 2017, to average 629¢/kg cwt (MLA). • The national mutton saleyard indicator increased 28% in 2017 year-on-year, to average 446¢/kg cwt (MLA). • At 30 June 2017, Australia’s sheep flock was 72.1 million head – up 68% year-on-year (ABS). Goatmeat •A  ustralian goatmeat slaughter increased 7%

year-on-year in 2017, to 2.1 million head (ABS) • Australian goatmeat exports increased 6% year-on-year in 2017, to 28,426 tonnes swt (DAWR). • Australia exported 91% of the goatmeat it produced in 2017 (ABS, DAWR). • The over-the-hooks goat (12-16kg) indicator averaged 585¢/kg cwt in 2017 – up 5% year-on-year (MLA). Data subject to revision between reports. IBISWorld converts historical data into current year terms, and data calculation models are updated. 3 Industry turnover is defined as income generated by businesses within the industry from the sales of goods and services. 4 Industry value add is the overall value of goods and services produced by businesses in an industry (also known as contribution to gross domestic product (GDP)). 5 Includes meat, co-products/further processed and live animal exports. The decrease in export value in 2016–17 was due to a reduction in cattle, lamb and mutton slaughter, and therefore lower export volumes. 6 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 Industry Projections, which seeks to estimate herd numbers from all farm businesses. 2  KEY EXPORT AND IMPORT PLAYERS THE OPERATING ENVIRONMENT PRODUCTION OF LIVESTOCK Figure 1. Global cattle herd and sheep flock Global and Australian herd and flock size • The global cattle herd was 1.47 billion head in 2016 (see Figure 1) (FAO). 1.30 1.20 1.10 1.00 0.90 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 • Australia accounts for a relatively small proportion of these totals, at around 2% of the global cattle herd and 6% of the global sheep flock (ABS, FAO). 1.40

billion head • The global sheep flock was 1.17 billion head in 2016 (see Figure 1) (FAO). 1.50 • Australia’s cattle herd was 26.2 million head at June 2017 and the sheep flock was at 72.1 million head (see Figures 2 and 3) (ABS). 7 Cattle Sheep Source: FAO Figure 2. Australian cattle herd Production 25 15 10 5 • Australia accounts for around 3% of global beef production and around 7% of global sheepmeat production (ABS, FAO). • Australia produced 697,655 tonnes cwt of lamb and mutton and 2.1 million tonnes cwt of beef and veal in 2017 (ABS). 20 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 • Global sheepmeat production was 9.3 million tonnes cwe in 2016 (see Figure 4) (FAO). 30 million head • Global beef and veal production was 65.97 million tonnes cwe in 2016 (see Figure 4) (FAO). Source: ABS Figure 3. Australian sheep flock 150 million head 120 90 60 30 1996 1997 1998 1999 2000 2001

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0 Source: ABS Figure 4. Global beef and sheepmeat production 80 70 million tonnes cwe 60 50 40 30 20 10 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 THE OPERATING ENVIRONMENT 3 Beef Sheepmeat Source: FAO 7 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 Industry Projections, which seeks to estimate herd numbers from all farm businesses PRODUCTION OF LIVESTOCK 4 THE OPERATING ENVIRONMENT CONSUMPTION OF RED MEAT 300 250 200 0 • The long-term protein consumption trend within Australia has been impacted by

various demographic, social, commercial and other factors. 8 Pork (cwe) Poultry meat (rtc) Source: OECD-FAO Figure 6. Australian per capita meat consumption - fresh and processed 50 40 30 20 Beef 2017 2015 2016 2013 2014 2011 2012 2010 2009 2007 Chicken 2008 2005 2006 2003 Lamb 2004 0 2001 10 2002 • Mutton consumption has all but disappeared domestically as the national flock size has reduced, the production focus has shifted, consumer attitudes have changed and export markets have increasingly been developed for this meat. Beef and veal (cwe) Sheepmeat (cwe) kg cwe • Despite increases in the retail price of lamb in recent years, Australia’s per capita lamb consumption has remained stable at around 9kg8 (see Figure 6), as Australia continues to be one of the largest per capita consumers of sheepmeat in the world (ABS, DAWR, OECD-FAO). 100 50 Domestic consumption •O  ver the last 20 years there has been a gradual decline in Australia’s per

capita consumption of beef, however at around 26kg of beef per capita8 (see Figure 6), Australia remains one of the world’s largest per capita consumers of beef (ABS, DAWR, OECD-FAO). 150 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 • In 2017, sheepmeat accounted for 5% of total global meat consumption (excluding seafood), while beef and veal accounted for 21%. Chicken and pork each accounted for 37% (OECD-FAO). 350 2000 • Over the last two decades, total global consumption of meat has been gradually increasing (see Figure 5). Total global consumption increased at an average rate of 2% per year for sheepmeat, 1% for beef, 4% for poultry and 2% for pork (OECD-FAO). Figure 5. Total global meat consumption million tonnes Global consumption Pork Source: ABS, DAWR, MLA calculations Domestic meat consumption is measured by removing the portion of exports (DAWR 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. CONSUMPTION OF RED MEAT THE OPERATING ENVIRONMENT 5 Alternative proteins increasing competition for beef and sheepmeat Red meat, such as beef and lamb, has always faced competition from traditional, cheaper proteins like chicken and pork, as well as seafood and other meats. Meat is also facing increased competition from alternative, non-meat proteins which are increasing in availability and sophistication, to the point of imitating the eating experience of meat. Right now, consumers appear reluctant to adopt lab-grown or “cellular” meat as a replacement for the real thing. Globally, in

2017, pork and chicken production levels were each around 70% higher than beef production, more than eight times that of sheepmeat, and are forecast to grow by 10% and 16%, respectively, by 2027 (OECD-FAO). In Australia, poultry consumption is almost double that of beef, with pork almost at parity, and both are forecast to grow at a faster rate over the next three years. Beef and lamb are both considerably more expensive, with the price disparity increasing from these other proteins. At the other end of the scale are cultured and artificial protein alternatives. Cultured meat, also known as cellular and in vitro meat, was first produced in 2013, and since then has attracted interest and investment from many high-profile individuals and organisations, including American food giants – and meat producers – Cargill and Tyson. Cultured and artificial meat manufacturers are attempting to tap into consumer mega-trends around ethics and sustainability. Consumer research shows that most

Australians are not aware of scientifically-produced meats, and of those who are aware of it, only one in five find it appealing (see Figure 7), with the main concerns being around its unknown healthfulness and safety. Ultimately, the success of cultured and artificial proteins will depend on consumers’ willingness to accept this source of protein as an alternative to meat, and the way the product is named and marketed will play a large role in that success. Figure 7. Appeal of scientifically produced meat (%) Extremely appealing Moderately appealing 21% Appealing 57% Unappealing 23% Neither appealing nor unappealing Slightly appealing Neither appealing nor unappealing Slightly unappealing Moderately unappealing Extremely unappealing Source: MLA/Pollinate Pulse survey March 2018 Australians aged 14-64 years (n=1,073) Names are also an important component of the larger, more immediate threat posed by plant-based alternative proteins. Many of these meat substitutes, such as

tofu and Quorn, have been around for a long time; what is new is the accelerating level of innovation that makes meat alternatives increasingly meat-like in their appearance, taste and even smell. Allied Market Research predicts the global meat substitute market will reach a value of $5.2 billion by 2020 However, these products are not immune from consumer concerns: they contrast strongly with general consumer trends toward natural, unadulterated and fresh foods in the developed world, and increasing meat consumption in developing nations in line with increasing wealth. CONSUMPTION OF RED MEAT KEY EXPORT AND IMPORT PLAYERS 6 Figure 9. Top five sheepmeat exporting countries (2017) • Australia was the world’s largest sheepmeat exporter in 2017, followed by New Zealand (see Figure 9) (DAWR, IHS Markit, Global Trade Atlas, Comtrade). 500 400 300 200 100 • Australia was the world’s largest goatmeat exporter in 0 2016 (see Figure 10) (DAWR, FAO). Australia New Zealand

United Kingdom Ireland Spain Source: DAWR, IHS Markit, Global Trade Atlas, Comtrade Figure 8. Top five beef and veal exporting countries (2017) Figure 10. Top five goatmeat exporting countries (2016) 30 ‘000 tonnes cwe ‘000 tonnes cwe 2,000 1,500 1,000 500 0 25 20 15 10 5 India Brazil Australia 0 United States New Zealand Australia Ethiopia Parkistan Kenya China Source: DAWR, FAO Source: DAWR, IHS Markit, Global Trade Atlas Figure 12. Top five sheepmeat importing countries (2016) • In 2017, the largest importer (in volume terms) of beef and veal was the US, followed by China (direct imports) and Japan (see Figure 11) (IHS Markit, Global Trade Atlas). • The top importing countries of sheepmeat in 2016 were China, France, the UK and the US (see Figure 12) (FAO). • In 2016, the key importers of goatmeat were the US, the United Arab Emirates and Saudi Arabia (see Figure 13) (FAO) . 250 ‘000 tonnes cwe Imports 200 150 100 50 0 China France United

Kingdom United States United Arab Emirates Source: DAWR, IHS Markit, Global Trade Atlas, Comtrade Figure 11. Top five beef and veal importing countries (2017) Figure 13. Top five goatmeat importing countries (2016) 20 1,200 ‘000 tonnes cwe ‘000 tonnes cwe 1,500 900 600 300 0 United States China Japan Source: IHS Markit, Global Trade Atlas Note: China includes direct imports only Hong Kong South Korea 15 10 5 0 United States United Arab Emirates Saudi Arabia Qatar Oman Source: FAO KEY EXPORT AND IMPORT PLAYERS THE OPERATING ENVIRONMENT • In 2017, Australia was the third largest beef and veal exporter, after India and Brazil (see Figure 8) (DAWR, IHS Markit, Global Trade Atlas). ‘000 tonnes cwe Exports THE OPERATING ENVIRONMENT 7 Importance of international markets Australia’s red meat and live exports generated $12.17 billion in 2017 Australia’s market diversification promotes competition among export markets for Australia’s range of

red meat products and livestock. Australia is in a prime position to take advantage of global growth in red meat consumption. Australian red meat is currently exported and enjoyed in more than 100 countries around the world, generating $10.7 billion in export revenue for the red meat industry in 2017 (IHS Markit, Global Trade Atlas). While Australia is a relatively small producer at the global level, it is one of the world’s largest exporters of red meat. Exports account for 69% of the beef and veal produced in Australia, 69% of sheepmeat and 91% of goatmeat in 2017 (ABS, DAWR). As well as the boxed meat trade, Australia also exported 867,056 live cattle and 1.9 million live sheep and 12,245 goats, worth close to $1.4 billion in 2017 (DAWR,ABS) In recent years, Australia has grown and diversified its exports, shifting from a heavy reliance on a handful of key destinations to a more varied customer base, with the top three markets accounting for just 55% of Australia’s red meat

export volumes in 2017 compared with 72% in 2007 (DAWR). This diversification promotes competition among export markets for Australia’s wide range of red meat products and livestock and enables Australian exporters to better negotiate the best price for their products whether it be lean manufacturing beef to the US, live sheep into the Middle East, high value grainfed beef into Japan, Korea and the EU, mutton into China or offal and live cattle into South East Asia. Australia is consistently one of the top beef, sheepmeat and goatmeat exporters globally, however, competition in the international marketplace is intensifying. This is particularly apparent in beef with all of Australia’s major beef exporter competitors forecasting production and export growth in coming years. In addition, many of these competitors are seeking to grow their share in high value markets, such as Japan or the US, placing them in more direct competition with Australia. The growing competition highlights

Australia’s need to be even more focused on meeting consumer needs while increasing productivity and efficiencies through the supply chain and being even more targeted in marketing to key destinations, supported by in-market intelligence and detailed consumer insights. Global red meat demand is forecast to grow 1-2% annually (OECD-FAO) in coming years on the back of increasing populations and a growing global middle class. Australia’s international markets reach places it in a prime position to continue to take advantage of this growth. Figure 14. Global market for Australian red meat and livestock (2017) Source: IHS Markit, Global Trade Atlas Meat (boxed) value includes live, ABS and MLA estimates. Note: Sheep values above include live goat exports KEY EXPORT AND IMPORT PLAYERS THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY* Australia’s red meat and livestock industry turnover was $65 billion in 2016–17, down 4% on revised 2015–16 figures,

but up 36% since 2012–13 (see Table 1). Figure 80 15. Industry turnover by sub-sector* 70 60 billion A$ Industry turnover is defined as income generated by businesses within the industry from the sales of goods and services. 40 30 20 Trends over time 10 • Red meat and livestock industry turnover increased by 36% from 2012–13 to 2016–17, driven by a 57% increase in turnover in the on-farm (beef cattle, sheep and mixed farming) and feedlot sectors of the industry (see Figure 15). 0 2012–13 2016–17 Figure 16. Industry turnover by sub-sector (2016–17) 25% – Beef cattle farming 4% – Sheep farming 18% – Mixed farming 7% – Feedlots 27% – Processing 9% – Wholesaling 10% – Retailing Source: Ernst & Young, IBISWorld, ABS By state Figure 17. Industry turnover by state (2016–17) 29% – New South Wales 25% – Victoria 21% – Queensland 8% – South Australia 13% – Western Australia 3% – Tasmania 1% – Northern Territory 0% – Australian

Capital Territory Comparison to other industries • The red meat and livestock industry’s turnover reached $65 billion in 2016–17, accounting for approximately 2% of Australia’s total key industry turnover. Source: Ernst & Young, IBISWorld, ABS Figure 18. Industry turnover compared with other industries (2016–17) 600 500 billion A$ • The largest industry by turnover, ‘Wholesale trade’, was about eight times larger than red meat and livestock. 2015–16 *The contribution of live exports to industry turnover is represented in beef, sheep and mixed farming. • Red meat and livestock production (beef cattle, sheep and mixed farming and feedlots) accounted for 54%, or $34.9 billion, of overall industry turnover in 2016–17, followed by processing (27%, or $17.3 billion) and sales (wholesaling and retail) (20%, or $12.7 billion) (see Figure 16) • To put turnover in the red meat and livestock industry into perspective, it is only 20% lower than the entire

‘Information, media and telecommunications’ industry, and greater than the ‘Education and training (private)’ and ‘Arts and recreation’ industries (see Figure 18). 2014–15 Source: Ernst & Young, IBISWorld Composition by sub-sector • The three mainland eastern states accounted for 74% of red meat and livestock industry turnover in 2016–17, followed by Western Australia (13%) and South Australia (8%) (see Figure 17). 2013–14 Beef cattle farming Sheep farming Mixed farming Feedlots Processing Wholesaling Retailing • Turnover in the processing sector also increased considerably since 2012–13, up 30%. • Turnover in domestic wholesaling and retailing over this period was more stable, increasing 4%. 50 400 300 200 100 Pu bli ca dm ini str Ar atio Ag ts & n & ric re sa f Ed ultu cre ety uc re, atio (pri at fo n va io re se te In ) n fo & stry rvic rm tra & e at io in fis s in n h g m (p ing Ad ed r m ia Re ivat in & i O He Ac str tel

th d m e) alt co ativ eco er m e m s ea h El car mo & s mu ervi t ec e c d u tri & atio pp nica es cit so n or ti Re y, g cia & f t se ons nt as l as oo rv al, , w s d ice s h a is s Tr irin ter tan erv an g & ce ice Pr sp & w (p s of es or rea as riv sio t, p l te at na os est ser e) l, s ta ate vic l& cie s e w erv s nt ar ific eh ices & ou te sin ch g ni ca Min M l se ing an rv uf ice a Co ctu s ns ring tr R uc W eta tio ho il n le tra sa de le tra de 0 * Data subject to revision between reports. IBISWorld converts historical data into current year terms, and data calculation models are updated. Source: Ernst & Young, IBISWorld, ABS Note: This only includes direct industry turnover for the defined industries INDUSTRY TURNOVER THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY INDUSTRY TURNOVER 8 Table 1: Industry turnover by sub-sector* ($m) Sub-sector 2012–13 2013–14 2014–15 2015–16 2016–17 11,646

12,580 14,658 18,281 16,380 Sheep farming 1,614 1,514 2,027 1,992 2,282 Mixed farming (beef/sheep) 6,135 6,797 8,427 11,240 11,543 Feedlots 2,742 2,965 3,762 4,778 4,660 13,280 14,807 17,896 18,590 17,316 6,064 6,293 5,488 6,049 6,164 Processing Wholesaling Retailing Total 6,163 6,312 7,678 6,714 6,568 47,644 51,268 59,938 67,644 64,912 Source: Ernst & Young, IBISWorld *The contribution of live exports to industry turnover is represented in beef, sheep and mixed farming. INDUSTRY VALUE ADD Trends over time • Australia’s red meat and livestock industry value add increased by 61% between 2012–13 and 2016–17. • Over this period, industry value add for the production sector (beef cattle farming, sheep farming, mixed farming and feedlots) increased by 89%, while industry value add for the processing sector increased by 27%. • Within the manufacturing industry, red meat and livestock processing contributed 3% to Australia’s

overall manufacturing industry value add in 2016–17 (see Figure 23). • Within the sales industry, red meat and livestock retail and wholesaling contributed 1% to Australia’s overall sales industry value add in 2016–17 (see Figure 24). Figure 19. Industry value add by sub-sector* (2016–17) 39% – Beef cattle farming 5% – Sheep farming 25% – Mixed farming 4% – Feedlots 18% – Processing 2% – Wholesaling 7% – Retailing • Industry value add in domestic wholesaling and retailing declined 1% between 2012–13 and 2016–17. Composition by sub-sector • The production sector (beef cattle, sheep and mixed farming and feedlots) accounted for 72%, or $13.3 billion, of overall industry value add in 2016–17, followed by processing (18%, or $3.4 billion) and sales (wholesaling and retail) (9%, or $1.7 billion) (see Figure 19) Source: Ernst & Young, IBISWorld *The contribution of live exports to industry value add is represented in beef, sheep and mixed farming.

Figure 20. Industry value add by state (2016–17) 27% – New South Wales 23% – Victoria 22% – Queensland 9% – South Australia 14% – Western Australia 4% – Tasmania 1% – Northern Territory 0% – Australian Capital Territory By state • In 2016–17, the three mainland eastern states accounted for 73% of red meat and livestock industry value add, followed by Western Australia (13%) and South Australia (9%) (see Figure 20). Source: Ernst & Young, IBISWorld, ABS Figure 21. Industry value add compared with other industries (2016–17) 150 Comparison to other industries • Mining recorded the highest industry value add in 2016–17 ($125 billion), which was almost seven times larger than that recorded for the red meat and livestock industry. INDUSTRY VALUE ADD 90 60 30 0 in • The red meat and livestock industry accounted for approximately 1.6% of Australia’s key industry total industry value add. 120 M • In 2016–17, red meat and livestock industry

value add was $18.4 billion, which was greater than the ‘Arts and recreation services’ industry ($12.7 billion) and ‘Agriculture, forestry and fishing’ ($17.1 billion) (see Figure 21) g Australia’s red meat and livestock industry value add was $18.4 billion in 2016–17, down 56% on revised 2015–16 figures, but up 61% since 2012–13 (see Table 2). • Within agriculture production, red meat and livestock production (beef cattle, sheep and mixed farming and feedlots) contributed 38% to Australia’s total agriculture production value add in 2016–17 (see Figure 22). in Industry value add is the overall value of goods and services produced by businesses in an industry (also known as contribution to gross domestic product (GDP)). billion A$ THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY Beef cattle farming Pu bli ca dm ini str Ar atio Ag ts & n & ric re sa ul cr fet tu ea y ( re p , fo tion riva Ed In re se te) fo st uc r rm r y

& vice at at io io fis s n n & h m tra Re ing e in d m El Acc dia in ec o & ea tri m O g cit m tele th (priv t y, od c er a Ad gas atio om se te) m , w n mu rvic in ist ate & fo nica es ra r & od tio tiv e wa ser ns Tr & s an su te vice sp pp se s or r t, p W ort vice R os ho ser s He en l v t t e a a alt l, l & sa ice h h w le t s ca irin a r r g r Pr e eh ade & &r of so ea R ous es sio cia l e et in l a sta ail t g na ss te ra l, s d ist cie an ser e nt ce vic ific M (p es & te anu riva ch fa te ni ctu ) ca l s rin Co erv g ns ice tru s ct io n 9 Source: Source: Ernst & Young, IBISWorld, ABS Table 2: Industry value add by sub-sector* ($m) Sub-sector 2012–13 2013–14 2014–15 2015–16 2016–17 4,169 2,063 3,826 8,263 7,125 Beef cattle farming Sheep farming 517 418 710 663 865 2,014 2,079 2,565 4,370 4,597 Feedlots Processing 340 499 608 694 741 2,643 3,390 4,043 3,783 3,358 Wholesaling 558 571

467 475 483 1,185 1,189 1,445 1,249 1,243 11,426 10,209 13,662 19,497 18,411 Retailing Total Source: Ernst & Young, IBISWorld *The contribution of live exports to industry value add is represented in beef, sheep and mixed farming. Figure 22. Agriculture production industry value add (2016–17) – Aquaculture – Forestry and logging – Fishing, hunting and trapping – Agriculture, forestry and fishing support services 38% – Red meat and livestock production 43% – Other agriculture 1% 6% 4% 8% Source: ABS and IBIS world Figure 23. Manufacturing industry value add (2016–17) 5% – Beverage and tobacco product manufacturing 2% – Textile, leather, clothing and footwear manufacturing 4% – Wood product manufacturing 3% – Pulp, paper and converted paper product manufacturing 3% – Printing (including the reproduction of recorded media) Food product manufacturing (excl. red meat) – 16% Red meat manufacturing – 3% 4% – Petroleum and coal product

manufacturing Furniture and other manufacturing – 3% 8% – Basic chemical and chemical product manufacturing Machinery and equipment manufacturing – 12% 5% – Polymer product and rubber product manufacturing 6% – Non-metallic mineral product manufacturing Transport equipment manufacturing – 8% 8% – Primary metal and metal product manufacturing Fabricated metal product manufacturing – 9% Source: ABS and IBISWorld Figure 24. Sales industry value add (2016–17) Non-store retailing and retail commission-based buying and/or selling – 2% 1% – Red meat wholesale and retail 9% – Basic material wholesaling Other store-based retailing – 26% 16% – Machinery and equipment wholesaling 5% – Motor vehicle and motor vehicle parts wholesaling Food retailing (excl. red meat) – 15% Fuel retailing – 2% Motor vehicle and motor vehicle parts retailing – 7% 6% – Grocery, liquor and tobacco product wholesaling (excl. red meat) 9% – Other goods wholesaling 2%

– Commission-based wholesaling Source: ABS and IBISWorld INDUSTRY VALUE ADD THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY Mixed farming (beef/sheep) 10 Meat Standards Australia The uptake of and the value delivered by MSA continues to strengthen, 20 years after its commercial release. An additional $152 million was returned to cattle producers in 2017–18 for cattle that met MSA requirements and company specifications. The program continues to be enhanced through the ‘Eating Quality Graded’ cipher and on-farm and processing objective measurement technologies. Meat Standards Australia (MSA) is a voluntary eating quality grading program that engages the entire supply chain to focus on delivering beef and sheepmeat that meets consumers’ eating quality expectations. It is estimated that an additional $152 million was returned to cattle producers in 2017–18 for cattle that met MSA requirements and company specifications. In 2017–18, 43%

of the annual national cattle slaughter, through 41 processors, were MSA graded (see Figure 40). From 2015–16 to 2017–18, the number of brands underpinning their product with MSA has grown 23% to 172, and there has been increased sophistication of brand owners to segregate their products into distinct bands of quality. The price differentials for MSA cattle compared to non-MSA cattle have been maintained at $0.21/kg for young, non-feedlot cattle and $0.13/kg for feedlot cattle The number of producers voluntarily registering to be a part of the MSA program now stands at 53,300. Producers are more actively using beef carcase feedback. As such, compliance to MSA requirements has improved to 943% and the average national MSA Index continues to increase, now at 57.78 In 2017–18, 25% of the national lamb slaughter followed MSA pathways, with 93% compliance to MSA requirements. Of the compliant lambs, 80% were trademarked under MSA licensed brands. There are now 19 processors actively

producing MSA lamb. A significant enhancement to the Australian Beef Language in October 2017 was the introduction of an alternative category called Eating Quality Graded (EQG). EQG is offered as an alternative option to dentition-based ciphers and will allow MSA brand owners, on a voluntary basis, to pack and label beef according to the eating quality outcome desired by consumers. MLA estimates that adopting EQG, rather than segregating beef by dentition categories, could potentially add an additional $46 million to the supply chain each year. Continued investments in objective carcase measurement technologies will enable an MSA cuts-based sheepmeat model to be released commercially. Research continues into identifying and validating camera technologies to increase efficiencies and consistency of beef carcase grading, as well as trialling on-farm technologies to identify cattle stress, providing a powerful decision making tool for producers. These advancements in eating quality

programs will provide a solid platform to integrate with yield technologies in forming potential value-based payment schemes. Figure 40. National MSA beef grading numbers 3.5 45% 3.0 millions 36% 2.5 2.0 27% 1.5 18% 1.0 9% No. of MSA graded carcases MSA % of national slaughter (RHS) Source: MLA, ABS INDUSTRY VALUE ADD 2017–18 2016–17 2015–16 2013–14 2014–15 2011–12 2012–13 2010–11 2009–10 2007–08 2008–09 2006–07 2005–06 2003–04 2004–05 2001–02 2002–03 0 1999–00 5 2000–01 THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY 11 0% Research continues into camera technologies, such as thermal mapping, that could be applied on-farm to measure individual animal stress. Stress reduces muscle glycogen, which can impact eating quality. EMPLOYMENT • Within the manufacturing industry, the red meat and livestock processing sector contributed 4% to Australia’s overall manufacturing employment in

2016–17 (see Figure 29). • Within the sales industry, the red meat and livestock retail and wholesale sector contributed 2% to Australia’s overall sales industry employment in 2016–17 (see Figure 30). Generation of direct and indirect employment Figure 25. Direct employment by sub-sector* • In 2016-17, the Australian red meat and livestock industry directly employed just over 191,800 people, a decline of 2.4% on revised 2015-16 figures, but an increase of 7% compared to 2012–13. 200,000 • The industry was also responsible for generating indirect employment for almost 246,300 people in businesses servicing the red meat and livestock industry. These additional jobs included those involved in transporting meat and livestock, activities related to livestock sales (such as livestock agents), employment in providing animal health services and supply of farm inputs. No. of individuals 150,000 100,000 50,000 0 2012–13 2013–14 *The contribution of live exports to

employment is represented in beef, sheep and mixed farming Figure 26. Direct employment by state (2016–17) 28% – New South Wales 25% – Victoria 21% – Queensland 10% – South Australia 11% – Western Australia 4% – Tasmania 1% – Northern Territory 0% – Australian Capital Territory • The processing sector generated 2.4 additional indirect jobs for every person directly employed. For the production sector, 1.2 additional indirect jobs were generated. Direct employment by state Source: Ernst & Young, IBISWorld • In 2016–17, New South Wales had the highest levels of direct employment in the red meat and livestock industry (28%), closely followed by Victoria (24.5%) and Queensland (21.4%) (see Figure 26) • Within agriculture production, red meat and livestock production (beef cattle, sheep and mixed farming and feedlots) accounted for 27% of Australia’s total direct employment in agriculture production in 2016–17 (see Figure 28). employment (‘000)

Figure 27. Direct employment compared with other industries (2016–17) 1,500 1,200 900 600 300 0 Pu El blic ec a tri dm cit in y, ist In ga ra fo s, tion rm w at at & s io er a n & fety m w ed as (pr ia te iva & se te) te rv le ice co m Ar m Mi s un nin Re Ag ts & ica g nt ric re al, ul cr R tion hi tur ea ed s rin e, tio m Ed g & fore n se eat uc re str rv at al y & ice io es fi s n & tate shi tra s ng e in Tr in rvic an sp O g (p es th ri or t, p W er vat Ad os ho ser e) ta les vic m Pr l& a e i n of i w le t s es Acc stra ar ra sio o tiv e d M m e na m & a hou e l, s od s nu si cie at up fac ng He nt ion por tur alt ific & t s in h & foo erv g ca te re ch d s ices & ni erv so ca cia l ice l a C ser s ss on vic ist st e an ru s ce cti (p on Re riva ta te) il t ra de • If both direct and indirect employment is taken into account, employment in the red meat and livestock industry represented approximately 4% of Australia’s key

industry total employment. 2016–17 Source: Ernst & Young, IBISWorld • In terms of direct employment in 2016–17, the production sector (beef cattle, sheep and mixed farming and feedlots) accounted for just over 132,100 jobs, the processing sector almost 29,800 jobs, with the remainder in retailing and wholesaling (see Figure 25). • In 2016–17, direct employment in the red meat and livestock industry represented approximately 1.8% of Australia’s key industry total employment (see Figure 27). 2015–16 Beef cattle farming Sheep farming Mixed farming Feedlots Processing Wholesaling Retailing Composition by sub-sector Employment compared with other industries and total workforce 2014–15 Source: Ernst & Young, IBISWorld, ABS EMPLOYMENT 12 THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY In 2016–17, the Australian red meat and livestock industry created employment for around 438,100 people. Of these, just over 191,800 people were

directly employed in the industry. The industry was also responsible for the employment of a further 246,300 people in businesses servicing the red meat and livestock industry. Figure 28. Agriculture production employment (persons) (2016–17) – Aquaculture – Forestry and logging – Fishing, hunting and trapping – Agriculture, forestry and fishing support services 27% – Red meat and livestock production 57% – Other agriculture THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY 13 1% 3% 2% 10% Source: ABS and IBISWorld Figure 29. Manufacturing employment (persons) (2016–17) Food product manufacturing (excl. red meat) – 22% 4% – Beverage and tobacco product manufacturing 4% – Textile, leather, clothing and footwear manufacturing 5% – Wood product manufacturing 2% – Pulp, paper and converted paper product manufacturing 4% – Printing (including the reproduction of recorded media) 1% – Petroleum and coal product manufacturing Red

meat manufacturing – 4% 5% – Basic chemical and chemical product manufacturing 5% – Polymer product and rubber product manufacturing Furniture and other manufacturing – 4% 5% – Non-metallic mineral product manufacturing Machinery and equipment manufacturing – 11% Transport equipment manufacturing – 9% 5% – Primary metal and metal product manufacturing 12% – Fabricated metal product manufacturing Source: ABS and IBISWorld Figure 30. Sales employment (persons) (2016–17) Non-store retailing and retail commission-based buying and/or selling – 2% 2% – Red meat wholesale and retail 6% – Basic material wholesaling 9% – Machinery and equipment wholesaling 3% – Motor vehicle and motor vehicle parts wholesaling Other store-based retailing – 36% 4% – Grocery, liquor and tobacco product wholesaling (excl. red meat) 6% – Other goods wholesaling 1% – Commission-based wholesaling 6% – Motor vehicle and motor vehicle parts retailing 2% – Fuel retailing

Source: ABS and IBISWorld Food retailing (excl. red meat) – 23% Table 3: Major players in Australia’s red meat processing sector Company 1. Industry Park Ltd (JBS Australia and Australian Consolidated Food Investment) 2. Teys Australia 3. NH Foods Australia 4. Thomas Foods International 5. Australian Country Choice 6. Kilcoy Pastoral 7. Y  olarno Pty Ltd (previously Bindaree Beef Group and Sanger) 8. N  orthern Co-operative Meat Company (NCMC) 9. Fletcher International Exports 10. Australian Agricultural Company Limited (AACo) 11. Craig Mostyn Group 12. Midfield Meat International 13. Nolan Meats 14. Western Australian Meat Marketing International Co-operative (WAMMCO) 15. Top Cut Foods 16. M C Herd 17. OSI International Foods 18. G & K O’Connor EMPLOYMENT No. of employees 10,838 4,625 1,701 1,659 1,400 920 807 775 657 549 500 405 401 348 328 264 205 168 Source: Ernst & Young, IBISWorld • The vast majority (90%) of meat and livestock industry employees live

in rural and regional areas, assisting decentralisation. 15 percent of workforce Industry employment is focused on rural and regional areas Figure 31. Age profile of industry workforce (2016) 12 9 6 3 0 • Almost 80% of meat processing employment and nearly all beef cattle and sheep production employment is located outside capital cities. 14 15-19 25-29 35-39 45-49 55-59 65-69 75-79 85-89 95-99 age group Meat processing Livestock production Australian workforce Source: ABS 2016 Census Age profile of the workforce • Compared to the Australian workforce generally, the meat processing industry offers more employment opportunities to younger Australians, with a median age of 25 to 29 years (see Figure 31). • Older Australians tend to dominate in the sheep and beef cattle production sectors (like the rest of agriculture). Figure 32. Education profile of industry workforce (2016) Postgraduate degree Graduate diploma/ certificate Bachelor degree Diploma/ advanced diploma

Certificate Education profile of the workforce • The highest level of education achieved by more than 50% of red meat and livestock employees is secondary education; 10% of red meat and livestock employees have a bachelor degree or higher (see Figure 32). Indigenous employment • Specialist sheep farms and mixed farms employ few Indigenous people. • Of those directly employed in specialist beef farms, 1.8% identify as Indigenous (see Figure 33). • For specialist beef farms in the Northern Territory, Indigenous employment accounts for 10.7% of the total employment, while in north-west Western Australia it is 15% (see Figure 33). Secondary education 0% 10% Industry workforce 20% 30% 40% 50% Australian workforce 60% Source: ABS 2016 Census Figure 33. Indigenous employment in the beef/processing industry (2016) 15 percent of workforce • Both the livestock production and meat processing sectors of the red meat and livestock industry offer most employment opportunities

to those with practical and technical skills, rather than higher levels of formal education. 12 9 6 3 0 All industries Specialist beef farms Meat processing NT beef farms NW WA beef farms Source: ABS 2016 Census • Indigenous Australians also comprise a higher proportion (2.8%) of the meat processing workforce than for Australian industries generally (1.7%) (see Figure 33) EMPLOYMENT THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY Information is provided below on characteristics of the red meat and livestock industry’s workforce. Critically, employment in the Australian red meat and livestock industry is heavily concentrated in rural and regional areas. THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY 15 Labour shortages – an ongoing and significant challenge for the industry A critical concern for both the livestock production and red meat processing sectors are labour shortages. In a recent National Farmers’

Federation (NFF) survey, beef and sheep producers confirmed that shortfalls in labour represented one of their primary concerns for the year ahead. Likewise, sourcing labour has become a significant challenge for meat processors. A survey of its processor members by the Australian Meat Industry Council has revealed that most Australian meat processing plants are operating at 90% of capacity or less. The aim of these plants is to operate at 100% capacity, but this would require almost 3,000 extra workers. Although most of these positions may be filled with local Australian workers, skilled overseas workers will be required to fill at least 25-30% of these positions. Attracting workers to the industry The Australian red meat and livestock industry has adopted a number of strategies to attract workers, including: • Promoting the industry as an exciting, innovative, diverse, well paid, secure, flexible industry in which to work, offering a variety of career paths. • Investing in

training – for example, the accredited training programs offered by MINTRAC (National Meat Industry Training Advisory Council Limited) to upgrade worker skills and offer advancement paths within the industry. • Sponsoring overseas workers in the occupation of ‘skilled meat worker’ for periods of up to four years and/or permanent residence – and developing support networks for these workers. In light of labour shortages and the need to remain globally competitive, the industry has and continues to invest in automation technology. Despite these initiatives, securing workers in the numbers needed by the industry continues to represent a challenge. Initiatives to address labour shortages Encouraging regional economic development is a key policy objective for federal and state governments. Employment provided by the red meat and livestock industry, whether involving Australian workers or overseas workers, provides the economic backbone for many regional economies. Of the 440,000

direct and indirect jobs supported by the industry, most are in regional and rural areas. The red meat industry’s peak councils and the National Farmers’ Federation have suggested the following initiatives to address regional employment issues: • Continuing investment in regional provision of government services (for example, in health and education), acknowledging that lower availability of these services in the regions represent a deterrent to city residents relocating. • Joint industry and government activity in communicating career opportunities in regional Australia. Changes could also be made to vocational educational funding, with a focus on skill sets to suit the needs of regional businesses rather than full qualifications. • Regulations to facilitate the addition of overseas workers where local labour gaps exist. EMPLOYMENT NUMBER OF BUSINESSES Figure 34. Red meat and livestock businesses across the supply chain* 100,000 80,000 no. businesses Trends over time

• The number of businesses within the red meat and livestock industry has remained relatively constant over recent years, with growth of 4.7% between 2012–13 and 2016–17 (see Figure 34). 60,000 40,000 20,000 • The relatively small increase in number of businesses since 2012–13 contrasts with larger increases in employment (7%), turnover (36%) and industry value add (61%). 0 2012–13 2013–14 2014–15 2015–16 2016–17 Beef cattle farming Sheep farming Mixed farming Feedlots Processing Wholesaling Retailing Source: Ernst & Young, IBISWorld Composition by sub-sector *The contribution of live exports to businesses is represented in beef, sheep and mixed farming. • In 2016–17, production (being beef cattle, sheep and mixed farming and feedlots) accounted for 94.8% of all businesses within the red meat and livestock industry (see Figure 35). Sales (retailing and wholesaling) accounted for 4.3%, while processing accounted for 09% Figure 35. Business

numbers by sub-sector (2016–17) 58% – Beef cattle farming 8% – Sheep farming 28% – Mixed farming 0% – Feedlots 1% – Processing 1% – Wholesaling 4% – Retailing By state • In 2016–17, New South Wales had 21,564 red meat and livestock businesses, accounting for 26.1% of all red meat and livestock businesses in Australia. This was closely followed by Queensland (19,048 businesses) and Victoria (17,946 businesses) (see Figure 36). Source: Ernst & Young, IBISWorld Table 4: Business numbers by sub-sector* Sub-sector Beef cattle farming Sheep farming Mixed farming (beef/sheep) Feedlots 2012–13 2013–14 2014–15 2015–16 2016–17 47,682 48,359 47,612 47,871 47,677 7,997 6,842 7,480 6,652 6,723 18,983 19,120 20,042 24,000 23,433 412 403 398 395 395 Processing 714 815 758 789 705 Wholesaling 689 699 558 545 550 2,276 2,255 3,150 3,060 3,009 78,753 78,494 79,999 83,311 82,492 Retailing Total Source: Ernst &

Young, IBISWorld *The contribution of live exports to the number of businesses is represented in beef, sheep and mixed farming. Figure 36. Red meat and livestock business numbers by state (2016–17) 26% – New South Wales 22% – Victoria 23% – Queensland 10% – South Australia 14% – Western Australia 4% – Tasmania 1% – Northern Territory 0% – Australian Capital Territory Source: Ernst & Young, IBISWorld, ABS NUMBER OF BUSINESSES 16 THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY In 2016-17, Australia had slightly less than 82,500 red meat and livestock businesses, a decrease of 1% on 2015-16 levels, but up 4.7% on the number of businesses in 2012–13. THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY 17 Foreign investment on the right terms is vital to the Australian red meat and livestock industry Australia may have been built on the sheep’s back, but it was also built using foreign funds. Since its

inception the Australian beef industry has attracted investment from many overseas sources, most notably England, the US, China, Japan and Brazil. Foreign investment has supplemented domestically sourced funds, allowing further expansion of the Australian red meat and livestock industry. As an example, Japanese investment in feedlots in the 1980s and 1990s was critical in expanding this important industry segment, allowing Australian beef to secure additional sales in Japan. Attracting domestic investors and savings for large red meat and livestock industry investments like this has often been difficult, partly due to a lack of national savings. Australia has a dynamic, successful red meat and livestock industry with significant potential. The industry is export reliant and capital intensive. Domestic and foreign investors alike want to be part of this success ANZ calculates that the Australian red meat and livestock industry will require additional investment funds of about $600

billion to 2050. The bank also suggests that foreign investors are likely to play a critical role However, regulations have recently been tightened on foreign investment in Australian agriculture. There is evidence from a range of sources, including from the OECD-FAO Foreign Direct Investment Restrictiveness Index, that barriers facing foreigners wishing to invest in Australian agriculture have increased. The red meat industry’s peak councils are supportive of regulations that encourage beneficial domestic and foreign investments, as outlined in RMAC’s Feeding Our Nation 2018 report. In light of the continuing need for foreign investment, the red meat industry’s peak councils have supported: • Lifting the $15 million threshold currently used by the Foreign Investment Review Board for screening foreign investment in agricultural land to a level comparable with other sectors (for example, mining or construction). • A feasibility study into the marketing of agribusiness

commodities and services as two-way investment throughout government and industry agencies, showcasing the entire industry. NUMBER OF BUSINESSES EXPORTS • Red meat and livestock exports (including co-products) increased from $9.4 billion in 2012–13 to $157 billion in 2014–15, before dropping to $13.3 billion in 2016–17, still 41% above 2012–13 levels (IHS Markit, Global Trade Atlas) (see Figure 37). Composition by sub-sector • Australia’s red meat and livestock exports occur in two primary forms: exports produced by meat processors (meat and meat co-products) and exports of livestock. 12 8 4 0 2012–13 Comparison to other industries • Red meat and livestock exports accounted for approximately 5.6% of Australia’s key industry exports in 2016–17 (see Figure 39) (IHS Markit, Global Trade Atlas, Ernst & Young, IBISWorld, ABS). • In 2016–17, red meat and livestock exports were valued $13.3 billion (IHS Markit, Global Trade Atlas) 2015–16 2016–17

Source: IHS Markit, Global Trade Atlas Figure 38. Red meat export volume by state of production (2016–17) 19% – New South Wales 22% – Victoria 40% – Queensland 9% – South Australia 6% – Western Australia 3% – Tasmania 1% – Northern Territory Source: DAWR Figure 39. Exports compared with other industries (2016–17) 80,000 70 60 50 40 30 20 10 0 billion A$ • The three mainland eastern states accounted for 81% of red meat exports, followed by South Australia (9%), Western Australia (6%) and Tasmania (3%) (DAWR). 2014–15 N Pu onlp me , p ta Aq ap lli ua F e c Po r a mi ore cu n ltu ly nd e m r st er co al m ry a Pri re n nt n pr ve in d Fa od rt in lo ing br ic W uct ed g / gg at o i q p ed od an ap ua ng m p d r er rry Te et rod ub pro ing xt al u be d Fu ile, pro ct m r p uct rn lea du a rod s itu th ct nu u re er m fa cts an , c an ctu d lot ufa rin ot hin c g he g tur Tr r m , fo ing Ch an an ot em sp uf we i or ac ar M cal t eq tur ac m u in hi an ip g ne u

m ry fac en / e tu t qu rin ip g Pr m im O R ar il a Fo ed ent od m y n m d et g pro eat al as / m ex duc et tra ts al ct pr ion o M Co du et al ct al m s or in e ing m in in g • In 2016–17, Queensland had the highest level of red meat exports, accounting for approximately 40% of export volumes (see Figure 38) (DAWR). 2013–14 Chilled/frozen meat Livestock exports Co-products/further processed • In 2016–17, exports by meat processors accounted for 89% ($11.9 billion) of total meat and livestock exports, while exports of live sheep and cattle accounted for 11% ($1.4 billion) (IHS Markit, Global Trade Atlas). By state of production 18 37. Export value by category 16 billion A$ Trends over time 20000 Figure Source: Ernst & Young, IBISWorld, ABS EXPORTS THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY Red meat and livestock exports totalled approximately $13.3 billion in 2016–17, down 11% year-on-year, but approximately 41% above

2012–13 levels. Market access THE ECONOMIC IMPORTANCE OF THE AUSTRALIAN RED MEAT AND LIVESTOCK INDUSTRY 19 The Australian red meat and livestock industry is continuing to benefit from the significant gains made in free trade agreements (FTAs) with China, Japan and Korea. The newly signed Comprehensive and Progressive Agreement for the Trans-Pacific Partnership and Peru-Australia Free Trade Agreement will deliver further benefits. Prospective access to both European Union (EU) and United Kingdom (UK) markets offer great opportunities for the Australian red meat industry. Improving market access for Australian red meat and livestock allows the industry to maintain and improve its global competitiveness, cut costs from the supply chain, maximise the value of exported product, diversify into new markets and reduce over-exposure to a smaller number of markets. Preferential access to some of Australia’s key export destinations is being realised via a suite of FTA

negotiations: • North Asian FTAs involving Korea, Japan and China -- Upon full implementation, these have the potential to deliver $20 billion in additional exports over 20 years. • Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) -- These countries account for about 27% of Australia’s combined beef, sheepmeat and offal trade. -- Existing import tariffs represent an annual tax on the Australian supply chain of around $1 billion. • Peru-Australia Free Trade Agreement (PAFTA) -- The PAFTA enables the Australian red meat and livestock industry to access opportunities in a completely new and growing market. -- It also represents a useful step in securing closer economic relations with the Pacific Alliance group of countries that also includes Chile, Columbia and Mexico. • Bilateral trade negotiations with the European Union (EU) -- The recent launch (June 2018) of bilateral trade negotiations between Australia and the EU offers tremendous

potential to improve access conditions in a market that hasn’t seen significant import reform over the past 40 years. -- Compared with other major supplying nations, Australia experiences disproportionately low volume quotas, coupled with high duties within certain quotas as well as trade prohibitive above-quota tariffs. -- Transformation of these import arrangements, involving significant improvements to current access, will be a necessary deliverable of the FTA discussions. • Post-Brexit UK FTA negotiations -- The UK is not self-sufficient in beef or sheepmeat, and higher imports will be required to supplement domestic production. Non-tariff barriers impose significant costs on the Australian red meat and livestock industry. They reduce trade volumes and/or diminish product returns with the annual negative impact value estimated to be approximately $3.4 billion. In partnership with the Australian Government, the Australian red meat and livestock industry continues to pursue a

number of priority non-tariff barriers such as: • accreditation of additional export establishments to supply China • access for chilled product into China • shelf-life conditions in the Middle East • global Halal issues. For further information, please see the Appendix. EXPORTS SPECIES STATISTICS AND PERFORMANCE 20 Cattle herd Feedlots • The Australian cattle herd was 26.2 million head at 30 June 2017 – up 4.8% year-on-year (see Figure 41) (ABS) 9 • 90% of the herd comprised beef cattle, while 10% were dairy cattle (ABS). • Queensland cattle accounted for 43% of the national herd, NSW accounted for 20% and Victoria made up 14% in 2016–17. WA and NT each accounted for 8%, while SA and Tasmania made up the remaining 4% and 3%, respectively (see Figure 42) (ABS). • 52% of the beef herd were cows and heifers (one year and over) in 2016-17 (see Figure 43) (ABS). Figure 41. Australian cattle herd 30 • The national quarterly average of cattle on feed was 1.03

million head in 2017 – 16% higher than the previous year (see Figure 44) (MLA/ALFA Feedlot Survey). • The average feedlot capacity was 1.3 million head in 2017 (AUS-MEAT) . • Australia’s average feedlot utilisation was 81% in 2017 (AUS-MEAT, MLA/ALFA Feedlot Survey) . • The number of grainfed cattle turned off was 2.9 million head in 2017 – up 10% from 2016 (see Figure 45) (MLA/ALFA Feedlot Survey) . • The grainfed cattle turnoff proportion of total adult cattle slaughter was 40% in 2017 (see Figure 45) (MLA/ALFA Feedlot Survey, ABS) . 25 20 Figure 44. Australian cattle on feed 1,100 15 1,000 10 900 000’ head 800 5 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Figure 43. Australian beef cattle herd composition (2017) 23% – Calves under one year 52% – Cows and heifers one year and over 25% – Other cattle one year and over 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 800 50% 750

700 40% 650 30% 600 20% 550 500 10% Grainfed cattle turn off 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 450 400 Source: ABS, Data as at June 2017 2007 Figure 45. Australian grainfed cattle turnoff 000’ head 20% – New South Wales 14% – Victoria 43% – Queensland 4% – South Australia 8% – Western Australia 3% – Tasmania 8% – Northern Territory 2006 Source: MLA/ALFA feedlot survey Source: ABS Figure 42. Australian cattle herd by state (2017) 2004 400 Queensland New South Wales Victoria Northern Territory South Australia Western Australia Tasmania 2005 500 2005 0 700 600 2004 million head • There was a record number of cattle on feed in Australia in 2017 – driven by dry conditions, low grain prices at the start of the year, and robust demand for grainfed beef in key export markets. 0% % of adult cattle slaughter (RHS) Source: ABS, MLA/ALFA feedlot survey 9 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 Industry Projections, which seeks to estimate herd numbers from all farm businesses. Source: ABS, Data as at June 2017 CATTLE SPECIES STATISTICS AND PERFORMANCE CATTLE Slaughter Over-the-hooks cattle indicators • The average 100-day grainfed steer (300-320kg) overthe-hooks indicator in Queensland averaged 529¢/kg cwt in 2017 – 4% lower than the previous year, but 22% higher than the five-year average (435¢/kg cwt) (see Figure 46) (MLA). Figure 46. Q  ueensland 100-day grainfed steer over-the-hooks indicator 600 • The proportion of female (cow and heifer) slaughter of the total kill was 45% in 2017, which indicates the national cattle herd was in a

rebuilding phase (see Figure 48) (ABS). • Female slaughter declined 5% year-on-year, to 3.3 million head, while male slaughter lifted 1%, to 3.9 million head in 2017 (ABS) Figure 48. Australian adult cattle slaughter 400 350 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 300 10 60% 8 50% Source: MLA Grainfed beef exports 40% 6 30% 4 20% 2 10% 0 0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 450 million head c/kg cwt 550 • Adult cattle slaughter totalled 7.2 million head in 2017 – down 2% on the previous year, and 13% below the five-year average (see Figure 48) (ABS). 500 Adult cattle • Australia’s grainfed beef exports totalled 272,682 tonnes swt – up 5% year-on-year (see Figure 47) (DAWR). • Japan is Australia’s largest export destination (in volume terms) for grainfed beef exports. • Grainfed beef exports to Japan accounted for 52% of Australia’s total grainfed beef

exports, followed by Korea (20%) and China (10%) in 2017 (DAWR). • Compared to the five-year average, grainfed beef exports to Japan in 2017 were up 11%, Korea up 35%, China up 60% and the EU up 5% (DAWR). % of female slaughter (RHS) Source: ABS Carcase weight • The national average adult carcase weight was 297.6kg in 2017 – 3% higher than the previous year, and 6% higher than the five-year average (see Figure 49) (ABS). Figure 49. Australian average adult cattle carcase weight 300 280 kg/head • 27% of Australia’s total beef exports was grainfed beef in 2017 – compared to the five year-average of 21% (DAWR). 260 240 220 200 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Figure 47. Australian grainfed beef exports 300 Source: ABS 250 Production 200 000’ tonnes swt • Australian beef and veal production totalled 2.15 million tonnes cwt in 2017 – up 1% year-on-year (see Figure 50) (ABS). 150 •

Compared to the five-year average, the volume of beef and veal produced in 2017 was down 9% (ABS). 100 50 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Japan South Korea Source: DAWR Other • Beef production in Queensland accounted for 48% of the national total in 2017, followed by NSW (22%), Victoria (17%), SA (5%), WA (5%) and Tasmania (3%) (ABS). Figure 50. Australian beef and veal production 3,000 2,500 ‘000 tonnes cwt 2,000 1,500 1,000 500 0 CATTLE 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 SPECIES STATISTICS AND PERFORMANCE 21 Source: ABS Beef exports Saleyard prices • Australian beef exports totalled 1.01 million tonnes swt in 2017 – similar to the year prior, but 10% lower than the five-year average (see Figure 51) (DAWR). • Japan was Australia’s largest beef export market (in volume terms) in 2017, taking 292,364 tonnes swt

– an increase of 11% year-on-year (see Figure 52) (DAWR). • Japan’s market share of Australian beef exports in 2017 was 29%, followed by the US (23%) and Korea (15%) (DAWR). • The value of Australian beef exports in 2017 was $7.45 billion – up 1% from the previous year (see Figure 51) (IHS Markit, Global Trade Atlas). • The national heavy steer (500-600kg) saleyard indicator fell 7% year-on-year in 2017, to average 523¢/kg cwt. This was 27% higher than the five-year average (MLA). • The national medium cow (400-520kg) saleyard indicator decreased 5% year-on-year in 2017, to average 446¢/kg cwt. This was 32% higher than the five-year average (MLA) Figure 54. National trade steer saleyard indicator Figure 51. Australian beef and veal export volume and value 700 1,400 600 10 500 8 billion A$ 400 800 6 600 4 200 2 100 Volume 2017 2015 2016 2013 2014 2011 2012 2010 2009 2007 2008 2006 2004 2005 2000 2003 0 0 1997 1998 1999 2000 2001 2002

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0 2001 400 200 300 2002 1,000 ¢/kg cwt ‘000 tonnes swt 1,200 Source: MLA Value (RHS) Source: DAWR (volume), IHS Markit, Global Trade Atlas (value) Retail prices Figure 52. Australia’s top five beef export markets (2017) • The national beef retail price indicator was estimated at an average of 1,927¢/kg rwt 10 in 2017 (see Figure 55) – very similar to the previous year (ABS, MLA calculations). 300 200 • As a result, the producer share of the retail dollar was estimated at 45% in 2017 – down two percentage points from 47% in 2016 (ABS, MLA calculations). 150 100 50 Figure 55. National beef retail price indicator Japan United States South Korea China Indonesia 2,000 Source: DAWR 1,800 1,400 1,200 • Feeder cattle accounted for 68% of Australia’s live cattle exports, followed by slaughter cattle (20%) and breeders (12%). 2017 2015 2016 2013 2014 2012 2011 2010

2009 2008 2007 2006 2005 2003 2000 1,000 2004 • Australian live cattle exports fell 24% year-on-year in 2017, to 867,056 head (see Figure 53) (DAWR). ¢/kg rwt 1,600 Live cattle exports 2002 0 2001 ‘000 tonnes swt 250 Source ABS, MLA calculations • Australia’s largest market for live cattle exports in 2017 was Indonesia (59% of total), followed by Vietnam (19%) and China (9%). Figure 53. Australian live cattle exports 1,400 1,200 800 600 10 400 Feeder and slaugther Source: DAWR, ABS 2017 2015 2016 2013 2014 2011 2012 2010 2009 2007 2008 2005 2006 2003 2004 0 2001 200 2002 ‘000 head 1,000  etail price indicators are estimated by indexing forward from R actual average prices of beef, Iamb and pork during the December quarter 1973, based on meat sub-category indexes of the consumer price index. These indexes are based on average retail prices of selected cuts (weighted by expenditure) in state capitals. Breeder CATTLE 22 SPECIES

STATISTICS AND PERFORMANCE • The national trade steer (330-400kg) saleyard indicator declined 4% year-on-year in 2017, to average 595¢/kg cwt (see Figure 54). However, this was 36% higher than the five-year average (MLA). • The average farm cash income of Australian beef producers increased 4% year-on-year, to $188,800 in 2016-17 (see Figure 56) (ABARES Australian Agricultural and Grazing Industries Survey). • Farm business profit increased 60% in 2016–17, underpinned by higher beef cattle prices (ABARES). • The average rate of return (excluding capital appreciation) of Australian beef cattle farms increased from 2.2% in 2015-16 to 2.7% in 2016–17 (ABARES) 200 160 120 80 40 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 SPECIES STATISTICS AND PERFORMANCE 23 Figure 56. National average beef farm cash income ‘000 A$ Farm financial performance11 Source: ABARES Note: This data is in real terms. Data as

at 30 June • Note that this data is for the year ending 30 June 2017. Lower cattle prices, higher grain prices and the expansion of drought affected areas since that time will likely impact the key indicators of farm financial performance for the 2017–18 reporting period. 11  reliminary estimates. The ABARES Australian Agricultural and Grazing Industries Survey includes beef producers with at least 100 head of P beef cattle on hand at 30 June. CATTLE 24 SPECIES STATISTICS AND PERFORMANCE Figure 57. Australian beef exports by volume (2017) In 2017, Australia’s top three beef export destinations (in volume terms) were Japan (292,364 tonnes swt, or 28.8% of total exports), the US (234,112 tonnes swt, or 23% of total exports), and Korea (148,552 tonnes swt, or 14.6% of total exports) European Union 1.8% Canada 2.0% China 10.8% Middle East 3.0% Hong Kong 0.8% Thailand 0.6% Malaysia 1.0% Singapore 0.6% Japan 28.8% United States 23.0% 14.6% South Korea 3.1% Taiwan 3.3%

Philippines 0.3% Papua New Guinea Indonesia 4.9% 0.9% Saudi Arabia 0.6% Dubai 0.3% Other Middle East 0.3% Kuwait 0.3% Qatar 0.2% Abu Dhabi Source: DAWR Figure 58. Australian live cattle exports (2017) In 2017, Australia’s top three live cattle export destinations (in volume terms) were Indonesia (512,871 head, or 59.2% of total exports), Vietnam (165,172 head, or 19% of total exports) and China (75,701 head, or 8.7% of total exports) China Turkey Japan 8.7% 2.4% Pakistan 1.8% Kuwait 0.8% Israel Vietnam 0.1% 3.7% Thailand 19.0% 0.2% Taiwan 0.1% 0.2% Malaysia 0.5% Brunei Qatar 0.4% Philippines 0.3% 2.5% Sri Lanka 0.3% Papua New Guinea Indonesia 59.2% Source: DAWR CATTLE SPECIES STATISTICS AND PERFORMANCE 25 Key sustainability priorities for the Australian red meat industry Sustainability is a key focus for the Australian red meat industry. The industry needs to adapt to variable climates, unpredictable rain patterns, changing trade agreements and protocols, varying state

and territory legislation, and critically, increasing customer and stakeholder expectations. To improve performance across the key areas of sustainability – economic prosperity, people and the community, environmental resilience and animal welfare – the beef industry has developed the Australian Beef Sustainability Framework. The sheepmeat industry is in the early stages of developing its own framework The key priorities for the beef industry are: 1. Animal husbandry Husbandry procedures include castration, dehorning, branding and ear marking. The industry seeks alternatives to invasive practices and, where practicable, administer pain relief. 2. Profitability across the value chain To attain economic sustainability the industry must generate positive, long-term rates of return on capital invested in cattle raising and beef production. While the top 25% outperforms the industry average, large structural impacts beyond the control of individual businesses significantly impact

capital return. 3. Balance of tree and grass cover The industry has commenced a process with an expert group of ecologists, remote sensing experts and productivity experts to track performance across the areas of biodiversity, deforestation and pasture conservation. 4. Antimicrobial stewardship Antibiotics are a valuable resource. Maintaining their efficacy is of critical importance The industry’s antimicrobial stewardship aims to improve their safe and appropriate application, reduce their use over time whilst upholding the health and welfare of livestock, and reduce the risk of antimicrobial resistance. 5. Manage climate change risk The Australian red meat industry has an ambitious plan to be carbon neutral by 2030. This follows a reduction in emissions between the baseline year of 2005 and 2015 of 45% as calculated by CSIRO. The implementation plan has projected that $200 million over 10 years is required to deliver on this target. 6. Health and safety of people in the industry

Workplace health and safety systems vary across the beef value chain. The on-farm sector is a unique business environment from a health and safety point of view. The combination of hazardous activities and the remote working environments makes farming one of the more dangerous industries in Australia. Key highlights from the 2018 Australian Beef Sustainability Framework annual report are: • a ‘carbon neutral by 2030’ target • establishing a $35 million Strategic Partnership for Animal Welfare • $120 million farm-gate returns from the Meat Standards Australia program • rollout of Profitable Grazing Systems to boost producer expertise (30% increase measured in the pilot) • 58% of Australians considering beef to be part of a healthy, balanced diet. Further details: SustainableAustralianBeef.comau CATTLE SHEEP • In 2016–17, breeding ewes (one year and over) accounted for 55% of Australia’s sheep flock, while lambs (under one year) made up 32% (see Figure 61)

(ABS). Figure 59. Australian sheep flock size by state 150 • Sheep slaughter increased 8% year-on-year, to 7.5 million head in 2017 (see Figure 62) – however, this remained 9% below the five-year average (ABS). Figure 62. Australian sheep and lamb slaughter 25 20 million head • The majority of Australia’s sheep population reside in NSW (37%), Victoria (21%), WA (20%) and SA (16%). Tasmania and Queensland each account for 3% of the national sheep flock (see Figure 60) (ABS). • National lamb slaughter totalled 22.4 million head in 2017 (see Figure 62) – down 2% year-on-year, although 2% higher than the five-year average (ABS). 15 10 90 Lamb Source: ABS 60 New South Wales Victoria Western Australia South Australia Queensland Tasmania Source: ABS Figure 60. Australian sheep flock size by state (2017) 37% – New South Wales 21% – Victoria 3% – Queensland 16% – South Australia 20% – Western Australia 3% – Tasmania Source: ABS, data as at June 2017 Figure

61. Australian sheep flock composition (2017) 32% – Lambs under one year 55% – Breeding ewes one year and over 13% – All other Source: ABS, data as at June 2017 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. • The national lamb carcase weight averaged 22.7kg/head in 2017 (see Figure 63) – up 1% from the previous year, and 3% higher than the five-year average (ABS). • Sheep carcase weights averaged 25kg/head in 2017 (see Figure 63) – an increase of 2% year-on-year, and 7% from the five-year average (ABS). Figure 63. Australian average sheep and lamb carcase weights 26 25 24 23 22 21 20 19 18 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

2016 2017 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0 Sheep Carcase weights 30 kg million head 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 5 120 Lamb Sheep Source: ABS Production • Australian lamb production totalled 509,221 tonnes cwt in 2017 (see Figure 64) – down 1% year-on-year, but 5% higher than the five-year average (ABS). • Mutton production lifted 11% from the previous year, although was down 2% from the five-year average, at 188,434 tonnes cwt (see Figure 64) (ABS)). • Total sheepmeat production (lamb and mutton) was 697,655 tonnes cwt in 2017 – an increase of 2% year-onyear, and 3% above the five-year average. SHEEP SPECIES STATISTICS AND PERFORMANCE • The Australian sheep flock was 72.1 million head12 at 30 June 2017, up 6.8% year-on-year (see Figure 59) (ABS) 12  26 Slaughter Sheep flock Figure 64. Australian

sheepmeat production 50 ‘000 tonnes swt 60 500 400 300 200 40 30 20 100 10 0 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 ‘000 tonnes cwt 600 Lamb United States China United Arab Emirates Source: DAWR Mutton Qatar South Korea Figure 67. Australia’s top five mutton export markets (2017) Source: ABS ‘000 tonnes swt 40 Sheepmeat exports • Australian lamb exports increased 4% year-on-year and 12% on the five-year average, to 250,798 tonnes swt in 2017 (see Figure 65) (DAWR). 32 24 16 8 • The US was the largest (in volume terms) destination for Australian lamb exports in 2017, at 55,158 tonnes swt (up 1% year-on-year), followed closely by China, at 48,209 tonnes swt (up 23% year-on-year) (see Figure 66) (DAWR). 0 China Malaysia Saudi Arabia United States Singapore Source: DAWR • The Middle East is a major export region for Australian lamb – in 2017, exports to the region

increased 3% from the year prior, to 63,757 tonnes swt (DAWR). • Australian live sheep exports lifted 3% year-on-year, to 1.9 million head in 2017 (see Figure 68) (DAWR) • Australian mutton exports were 146,873 tonnes swt in 2017– 11% higher than the previous year, although 2% lower than the five-year average (see Figure 65) (DAWR). • Australia’s largest markets for live sheep exports in 2017 were Qatar (35% of total), Kuwait (32% of total) and Turkey (11% of total) (DAWR). Live sheep exports • China was Australia’s largest (in volume terms) export destination for mutton in 2017, at 34,985 tonnes swt (see Figure 67) (DAWR). Figure 68. Australian live sheep exports 8 7 6 million head Source: ABS, DAWR 300 3.5 250 3.0 2.0 1.5 1.0 50 0.5 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0 billion A$ 2.5 100 Mutton volume Lamb volume Total value (RHS) 0 3 2 0 Figure 65. Australian sheepmeat export

volume and value 150 4 1 • The value of Australian sheepmeat (lamb and mutton) exports in 2017 was $3.04 billion – up 24% year-on-year (see Figure 65) (IHS Markit, Global Trade Atlas). 200 5 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 • Other key export destinations for Australian mutton were Malaysia (14,102 tonnes swt), Saudi Arabia (13,936 tonnes swt) and the US (13,411 tonnes swt) (DAWR). ‘000 tonnes swt Saleyard prices • The national trade lamb saleyard indicator averaged 629¢/ kg cwt in 2017 (see Figure 69) – 13% higher than the previous year, and 35% higher than the five-year average (MLA). • The national mutton saleyard indicator increased 28% year-on-year and averaged 446¢/kg cwt in 2017. This was 53% higher than the five-year average (MLA). Figure 800 69. National trade lamb saleyard indicator 700 Source: DAWR (volume), IHS Markit, Global Trade Atlas 600 ¢/kg cwt 500 400 300 Source:

MLA SHEEP 2017 2015 2016 2013 2014 2011 2012 2010 2009 2007 2008 2005 2006 2003 2004 2002 100 2001 200 2000 SPECIES STATISTICS AND PERFORMANCE 27 Figure 66. Australia’s top five lamb export markets (2017) Farm financial performance14 Retail prices • The average lamb retail price indicator was estimated at 1,487¢/kg13 rwt in 2017 – 2% higher than 2016 levels (see Figure 70) (ABS, MLA calculations). • The average rate of return (excluding capital appreciation) of Australian lamb producing farms increased from 2.8% in 2015–16 to 4.3% in 2016–17 (ABARES) Figure 70. National lamb retail price indicator 1,600 1,300 ¢/kg rwt • Note that this data is for the year ending 30 June 2017. Higher feed prices and the expansion of drought affected areas since that time will likely impact the key indicators of farm financial perfomance for the 2017–18 reporting period. 1,000 700 2017 2015 2016 2013 2014 2011 2012 2010 2009 2007 2008 2005

2006 2003 2004 2001 2002 400 2000 • Farm business profit more than doubled (up 109%) year-on-year, to $184,700 in 2016–17 (ABARES). Figure 71. National average lamb farm cash income 300 Source: ABS, MLA calculations 180 120 60 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017  R  etail price indicators are estimated by indexing forward from actual average prices of beef, Iamb and pork during the December quarter 1973, based on meat sub-category indexes of the consumer price index. These indexes are based on average retail prices of selected cuts (weighted by expenditure) in state capitals. 14  Preliminary estimates. The ABARES Australian Agricultural and Grazing Industries Survey includes producers that sold at least 200 lambs for slaughter in the 12 months to 30 June. 13 ‘000 A$ 240 Source: ABARES Note: This data is in real terms. Data as at 30 June SHEEP 28 SPECIES STATISTICS AND PERFORMANCE • As a

result, the lamb producer share of the retail dollar was estimated at 60% in 2017 – a five percentage point increase from 55% in 2016 (ABS, MLA calculations). • The average farm cash income of Australian slaughter lamb producers increased 35% year-on-year in 2016–17, averaging $281,200 (see Figure 71) (ABARES Australian Agricultural and Grazing Industries Survey). SPECIES STATISTICS AND PERFORMANCE 29 29 Figure 72. Australian sheepmeat exports by volume (2017) In 2017, Australia’s top three sheepmeat (lamb and mutton) export destinations (in volume terms) were China (83,195 tonnes swt, or 20.9% of total exports), the US (68,569 tonnes swt, or 17.2% of total exports) and Dubai (24,429 tonnes swt, or 61% of total exports) European Union 3.9% Canada 2.3% China 20.9% Middle East 27.2% 6.1% Dubai 4.9% Saudi Arabia 4.3% Qatar 2.8% Jordan 2.4% Kuwait 1.9% Bahrain 1.8% Oman 1.3% Iran 1.1% Abu Dhabi 0.7% Other Middle East Hong Kong 1.5% Malaysia 5.6% Singapore 2.9% 1.0%

Mauritius Japan 3.2% United States 17.2% 3.6% South Korea 1.5% Taiwan Mexico 0.7% 0.8% Caribbean 3.1% Papua New Guinea 1.0% Pacific Islands Source: DAWR Figure 73. Australian live sheep exports (2017) In 2017, Australia’s top three live sheep export destinations (in volume terms) were Qatar (658,000 head, or 34.9% of total exports), Kuwait (604,678 head, or 32% of total exports), and Turkey (198,303 head, or 10.5% of total exports) China 0.2% Turkey 10.5% 2.8% Jordan Israel 4.5% 7.0% UAE Kuwait 32.0% 6.1% Oman 34.9% Qatar Source: DAWR SHEEP Malaysia 1.9% 0.2% Singapore GOAT Slaughter 30 Goatmeat exports • Australian goatmeat exports totalled 28,426 tonnes swt in 2017 (see Figure 77) – up 6% year-on-year, although 8% lower than the five-year average (DAWR). • In 2017, goat processing in Victoria lifted 6% to 1.06 million head, Queensland slaughter (449,279 head) eased 4%, NSW (123,839 head) increased 49%, SA (395,888 head) increased 19% and WA (45,936

head) declined 12% year-on-year (see Figure 75) (ABS). • The US is Australia’s largest export destination for goatmeat – accounting for 66% of total goatmeat exports in 2017, at 18,885 tonnes swt (see Figure 78) (DAWR). Figure 74. Australian goat slaughter • Other key markets in 2017 were Taiwan (12% of total), Canada (6%), Korea (6%) and Trinidad & Tobago (5%) (DAWR). Figure 77. Australian goatmeat export volumes 2,500 40 35 1,500 1,000 500 25 20 15 10 Source: ABS 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 5 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0 30 ‘000 tonnes swt ‘000 head 2,000 Source: DAWR Figure 75. Australian goat slaughter by state (2017) Figure 78. Australia’s top five goatmeat export markets (2017) ‘000 tonnes swt 20 6% – New South Wales 51% – Victoria 22% – Queensland 19% – South Australia 2% –

Western Australia 0% – Tasmania 15 10 5 0 United States Taiwan Canada South Korea Trinidad and Tabago Source: ABS Source: DAWR Carcase weights • Nationally, adult goat carcase weights averaged 15.3kg in 2017 – down 4% from the previous year (ABS). Production • Australian goatmeat production totalled 31,414 tonnes cwt in 2017 (see Figure 76) – up 4% year-on-year, but unchanged from the five-year average (ABS). Figure 76. Australian goatmeat production 35 • Australian live goat exports totalled 12,245 head in 2017 – down 77% year-on-year. • The key destinations were Malaysia, the Philippines and the United Arab Emirates. Over-the-hooks indicators • In 2017, the over-the-hooks goat (12-16kg) indicator averaged 585¢/kg cwt – up 5% year-on-year (see Figure 79) (MLA). Figure 79. Eastern states over-the-hooks goat indicator (12-16kg) 25 600 20 500 300 2017 2016 2014 2015 2013 2011 2012 2010 2008 2009 100 2007 200 2005 Source: ABS 400 2006 0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 5 2004 10 2003 15 ¢/kg cwt ‘000 tonnes cwt 30 Live goat exports Source: MLA GOAT SPECIES STATISTICS AND PERFORMANCE • The number of goats processed in 2017 totalled 2.1 million head (see Figure 74) – up 7% from the previous year and 2% higher than the five-year average (ABS). SPECIES STATISTICS AND PERFORMANCE 31 Figure 80. Australian goatmeat exports by volume (2017) In 2017, Australia’s top three goatmeat export destinations (in volume terms) were the US (18,885 tonnes swt, or 66% of total exports), Taiwan (3,553 tonnes swt, or 12% of total exports), and Canada (1,814 tonnes swt, or 6% of total exports). Canada 6.4% Japan 1.6% 6.4% South Korea 12.5% Taiwan United States 66.4% Other 1.5% 5.2% Caribbean Source: DAWR Figure 81. Australian live goat exports (2017) In 2017, Australia’s top three live goat export destinations (in volume terms) were

Malaysia (11,357 head, or 93% of total exports), Philippines (520 head, or 4% of total exports) and the UAE (229 head, or 2% of total exports). UAE 2% Malaysia 93% Source: DAWR GOAT 4% Philippines 32 APPENDIX 33 APPENDIX The tables below provide further details to the market access snapshot on page 19. Table 5: Tariffs/quotas applicable to Australian beef in 2018 (selected FTA markets) Base tariff (prior to FTA) US (AUSFTA) 1 Jan 2018 Full implementation of FTA Quota: 378,214 tonnes Quota: 423,214 tonnes In-quota tariff: 0% In-quota tariff: 4.4US¢/kg Out-of-quota tariff: 14.08% Out-of-quota tariff: 26.4% 0% tariffs: Jan 2022 onwards Thailand (TAFTA) 51% No quota restriction Jan 2023 onwards 5.33 0%: Jan 2020 onwards 6% 0% 0% 40% 26.6% 0%: Jan 2028 onwards Japan chilled (JAEPA)* 38.5% 29.3% 23.5%: April 2028 onwards Japan frozen (JAEPA)* 38.5% 26.9% 19.5%: April 2031 onwards 12% 7.2% 0%: Jan 2024 onwards Base tariff (prior to FTA) 1 Jan 2018

Full implementation of FTA Lamb 0.7US¢/kg Mutton 2.8US¢/kg 0% 0% 32% 0% 0% 6% 0% 0% 22.5% 11.2% 0%: Jan 2023 onwards 0% 0% 0% 15% 8.3% 0%: Jan 2023 onwards Chile Korea (KAFTA) China (ChAFTA) * Tariff change in Japan effective 1 April Table 6: Tariffs applicable to Australian sheepmeat in 2018 (selected FTA markets) US (AUSFTA) Thailand (TAFTA) Chile Korea (KAFTA) Japan chilled (JAEPA)* China (ChAFTA) AUSFTA: Australia-United States Free Trade Agreement (2005); TAFTA: Thailand-Australia Free Trade Agreement (2005); Australia-Chile FTA (2009); KAFTA: Korea-Australia Free Trade Agreement (2014); JAEPA: Japan-Australia Economic Partnership Agreement (2015); ChAFTA: China-Australia Free Trade Agreement (2015) Table 7: Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP or TPP-11) tariffs applicable to Australian beef/sheepmeat (selected CPTPP markets) Japan (beef) Base tariff (1 Jan 2018) Full implementation of CPTPP 26.9% - 293%

(JAEPA) 9%: within 15 years 26.5% 0%: within 5 years Canada (beef) Canada (sheepmeat) Mexico (beef) Mexico (sheepmeat) 2.5% 0%: entry into force 20% - 25% 0%: within 10 years 10% 0%: within 8 years CPTPP comprises 11 member countries (previously 12 members prior to the withdrawal of the US): Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam. Table 8: Tariffs applicable to Australian beef and sheepmeat potentially destined for Peru Base tariff (1 Jan 2018) Full implementation of PAFTA 11% - 17% 0%: either entry into force or within 5 years 9% 0%: entry into force Beef Sheepmeat/goatmeat Table 9: Tariffs/quotas applicable to Australian beef and sheepmeat destined for the EU (2018) Beef (‘Hilton’) Beef (HQB grain fed) Sheepmeat/goatmeat APPENDIX Quota (tonnes) In-quota tariff Out-of-quota tariff 7,150 20% 12.8% + up to €31/kg 45,000 (shared) 0% 12.8% + up to €31/kg 19,186 0% 12.8% + up to €31/kg

34 GLOSSARY AND KEY TERMS 34 GLOSSARY AND KEY TERMS • ABS – Australian Bureau of Statistics • ABARES – Australian Bureau of Agricultural and Resource Economics and Sciences • ALFA – Australian Lot Feeders’ Association • b – billion • cwt – carcase weight • cwe – carcase weight equivalent • DAWR – Department of Agriculture and Water Resources • EU – European Union • FAO – Food and Agriculture Organization • Farm cash income – Farm cash income is a measure of cash funds generated by the farm business for farm investment and consumption after paying all costs incurred in production • FTA – Free Trade Agreement • Industry turnover – the income generated by business within the industry from the sales of goods and services. It includes the income generated from rent, leasing and hiring. • Industry value add – Industry value add is the overall value of goods and services produced by businesses in an industry (also known as

contribution to gross domestic product (GDP)). • LiveCorp – Australian Livestock Export Corporation Ltd • m – million • MENA – Middle East and North Africa • MINTRAC – National Meat Industry Training Advisory Council Limited • Mixed farming classification – This classification is made up of producers in the industry who are engaged in farming both sheep and beef cattle. The statistics are derived from IBIS Reports A0141 Sheep-Beef Cattle Farming in Australia and A0145 Grain-Sheep or Grain-Beef Farming in Australia with proportions relating to canola, wool, other grains and wheat removed. • MSA – Meat Standards Australia • MLA – Meat & Livestock Australia • Mt – million tonnes • NFF – National Farmers’ Federation • OECD-FAO – Organisation for Economic Co-operation and Development • Over-the-hooks – refers to the marketing of cattle/sheep/lambs directly from the farm to an abattoir where a producer is paid for the value of the carcase

based on a sliding grid. The skin is also evaluated for length and quality and is purchased by the processor. The seller generally pays for the animal’s transport from the farm to the abattoir. The producer generally receives payment within a seven to 14-day period • RMAC – Red Meat Advisory Council • rtc – ready to cook • rwt – retail weight • swt – shipped weight • tariff – a tax or duty to be paid on a particular class of imports or exports • UK – United Kingdom • US – United States • USDA – United States Department of Agriculture GLOSSARY AND KEY TERMS Meat & Livestock Australia Level 1, 40 Mount Street, North Sydney NSW 2060 Phone: 02 9463 9333 l Fax: 02 9463 9393 mla.comau