Cattle industry fends off drought but bumps into trade barriers
You've heard about the drought that hit the Australian beef industry so hard? Well, the drought was bad, but some astute management practices kept the damage from being too severe. The industry's real problem is getting excluded from markets by trade barriers.
This is, at least, the view of Dr. Bruce J. Standen, economics and finance director of the Australian Meat and Livestock Corporation.
The cattle industry here has been shut out of so many markets, notably in Europe, that it has been in a state of long-term decline because of lack of demand. As Dr. Standen sees it, the great hope for Australia, whose beef production is projected to be 1.26 million tons this year, is for the Pacific Basin peoples to become big beef-eating customers. But even there, Australians worry about the prospect that beef from the European Community - notably Ireland - and South America could crowd them out of the market.
''There's been a fairly popular misconception - well within Australia as well as overseas - that the drought devastated the livestock industry,'' Dr. Standen says.
In fact, this view seemed to prevail with federal agriculture officials this correspondent interviewed, one of whom identified the cattle industry as one of the sectors ''still in the pits,'' despite the breaking of the drought.
''There's no doubt this was the worst drought ever,'' Dr. Standen says. But as a result of ''the resilience of the industry,'' the effect simply wasn't that great. ''Very few livestock died, and reproduction rates weren't largely affected.''
When the semi-monsoonal summer rains that usually fall upon Queensland and other cattle-raising areas during the first months of the year didn't come in 1982, cattlemen saw trouble coming and preventively slaughtered some 50 percent more head than usual. ''It was selective slaughtering - and the cattle weren't in poor condition,'' Dr. Standen says.
The ranchers moved the resulting smaller, more manageable herds to the pockets around the country that were getting rain. ''The cattle were moved to land owned by hobby farmers, to forest land, or to land otherwise not in use. The process is fairly common - like taking your dog to a kennel.''
With this strategy, the ranchers were able to minimize the effects of the drought. ''The drought was one factor, but not a great one, in the long-term decline of Australian cattle,'' Dr. Standen says. ''Too much has been said on the drought and not enough on the broader issues facing the cattle industry today.''
The principal broad issue is market access. Agricultural issues are always emotional, even in this post-industrial age; this one is no exception.
Australia's cattle population is down from 33.4 million head in 1972 to 22 million today. ''At 22 million head we can supply our current markets,'' mainly in the United States (which takes roughly a quarter of Australia's total beef production, mostly for institutional and fast-food use); in Japan; and elsewhere in the Pacific Basin. ''But we have virtually dismissed the rest of the world. We can't compete with dumped prices.''
There's little potential for growth in the industry until market access is eased, Standen adds.
The EC's common agricultural policy has resulted in subsidies to producers and a 420,000-ton stockpile. ''They're the No. 2 beef exporter in the world now.'' And this, as the Australians see it, leads to dumping of beef in non-EC countries such as Sweden and Austria - and even in the Eastern bloc and the Mideast. ''This year, all we'll be able to export to Europe - including Eastern Europe and countries like Sweden - is 5,000 tons,'' Standen says.
Pacific Basin countries have typically had policies against buying beef from countries with endemic hoof-and-mouth disease; this gives Australia, which is free of the disease, an edge.
But now Australians are concerned that Ireland, part of the EC but disease-free, may be crowding into some Pacific Basin markets.
''We're going to give the EC a hard time on that,'' says Standen.
''We would like to see access to Japan liberalized - on a multilateral rather than a bilateral basis,'' he adds. Australia worries that it simply doesn't have the same clout as the US to come out well in a one-on-one deal with another country.
It also worries that the US has managed to get the lion's share of the Japanese import market by getting specifications written to give an edge to US grain-fed instead of Australian range-fed beef.