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Key cattle price indicator breaks $10 per kilo barrier, yet beef prices look set to 'explode' further

Saturday July 24, 2021 - 23:09 EST

Beef prices have "exploded", according to one butcher, as the Eastern Young Cattle Indicator (EYCI) breaks through the $10 per kilogram barrier, up a massive 150 per cent in just two years.


The record high price of cattle in saleyards is pushing up the price of beef in shops, with prime cuts selling for $70/kg while even mince is getting dearer.


Retailers say it is unsustainable, but prices are not likely to change for a few years until the national herd grows.


Butcher Ted Ellison, who runs a boutique drive-through shop in Toowoomba, said he is seeing more of his customers buying cheaper cuts of beef and mince.


"It's gone from that premium line back into your mince and sausages and your basic cuts, making mince go further," he said.


At his shop, a piece of rib eye will set you back at least $70/kg and beef sausages and mince are over $15/kg.


He is finding it hard to keep prices down when the cost of the carcass is so high.


"$10 a kilo, landed at the back door ? sustainably, it's not there and it can't keep going on," Mr Ellison said.


"It definitely makes it hard to cut your way out of a body of beef."


On the other side of town, butcher Jason Patton's family run a large outlet selling meat as close to wholesale prices as they can, but even he has noticed a change in consumer behaviour.


"It's a lot dearer for a family to feed on good steak. It's pretty much like a delicacy," he said.


Why are cattle so expensive?


The drought really hollowed-out Australia's beef herd and sheep flock, and now the seasons have turned and the paddocks are full of grass again farmers are hanging on to every animal they can to rebuild.


It got so bad that many farmers had to sell even their breeding animals, so building the numbers back up is going to take a long time. 


Plus protein is in short supply globally. 


The outbreak of Swine Flu in China decimated their pig population and they have switched to beef to fill the gap. 


Most of the beef in Australia is exported, and with demand so high overseas it keeps the price high at home.


Sellers making big money


Anybody with cattle to sell is making big money.


The online selling platform AuctionsPlus saw turnover increase by $1 billion in the past twelve months.


When the price of a pen of cattle pushed over six figures, buyers did hesitate for a little while, according to market analyst Tim McRae.


"If you buy 50 steers or 30 cows with calves at foot you're looking to stump up over $100,000 ? and that's a lot of money," he said.


Cows not even in calf are also at record levels in some regions, hitting $3.57/kg at Gunnedah in north-west NSW.


Processors losing $350 per head


When livestock prices are this high, processors lose money. 


Patrick Hutchison from the Australian Meat Industry Council said processors were losing about $350 per head and most have been in the red for 12 months now.


They are hoping things will turn around in the spring as livestock numbers rebuild.


Meanwhile, they are having to extract value from each carcass wherever they can.


"It's not just about loin cuts going to five star restaurants, it's also hides, offal, and the secondary cuts," Mr Hutchison said.


The slaughter rate nationally has plummeted and the value of beef production is down almost 5 per cent on last year. 


Pork and chicken looking good


The industry often smooths out the fluctuations in meat prices for the consumer, but the rise in the cattle market is beginning to affect prices in the retail sector, according to Sydney butcher Craig Cook from Prime Quality Meats.


"It's really pork and chicken only on our lips because beef has absolutely exploded, and as of this week lamb is on the move as well," he said.


Pork and chicken have always been the poor cousins to beef and lamb in Australia, but with such a big gap between the prices per kilo it is likely that consumption will shift.


Meanwhile, chicken and pork production is holding steady and the cost of chicken, according to Craig Cook, has actually gone down.


"We've seen a big fall in the poultry market ? lost restaurant trade. Product put back on retail market, is some good shopping out there. "







- ABC

© ABC 2021

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