Cattle price bonanza predicted when drought breaksVirginia Tapp, Thursday August 14, 2014 - 14:38 EST
A beef consultant is predicting cattle prices in Australia could double when the drought breaks, reaching up to $4 per kilogram.
Former CEO of the Northern Territory Livestock Exporters Association Dr Ross Ainsworth, is based in Indonesia, and has worked as a vet in the beef industry for the last 40 years.
He says a price correction within the Australian cattle market is inevitable and could be more significant than
In May, American beef producers were being paid US$1.50 per pound (A$3.20 a kilo), a figure described as 'unheard of'.
Dr Ainsworth believes Australian farmers are next in line to enjoy a rise in the price of cattle.
He says the current beef supply demand situation is unprecedented.
"I just happen to be travelling around Asia quite a bit and there are no cattle left. So if a thousand million people have just run out of beef, the only reason we have to sell them cheaply is because we're stuck with this damn drought.
"As soon as that stops and we don't have to sell them, then the farmer will finally get a decent price."
Meat and Livestock Australia has been pre-empting a price recovery in the beef industry for several months, but until now no-one has named a price.
Dr Ainsworth is basing his prediction on simple economics, as well as
"I would think it would get to at least $3 per kilogram, and it could get to $4 per kilogram.
"If the Chinese open their live beef cattle trade to Australia, they're paying $5 per kilo live weight, so if it costs a dollar per kilogram to get cattle to China, the Australian farmer could be paid $3 per kilogram."
Similar cattle price bonanzas have been predicted in previous droughts, with no major price recoveries ever eventuating, but Dr Ainsworth says the situation has changed.
"China has eaten most of its own herd, and it's now eating the South East Asian herd, so there's a thousand million people in China that don't have enough beef, and they've never put this pressure on the market before.
"The world is going to eat our beef in a big hurry as soon as they can get at it."
Dr Ainsworth's comments have gained widespread interest from the farming community.
Western Queensland grazier Michael McKellar says the figures are very optimistic.
"We probably will see an increase in the value of cattle, but I don't think we'll see double or triple. I don't think people will have the financial capacity to pay an exorbitant price for cattle."
He also believes the benefits of higher prices wouldn't flow onto producers straight away.
"People will need to build their numbers and hold their numbers and that takes time. It's going to be a two or three-year project."
© ABC 2014
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