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Enabling Australia’s great cattle migration
Infrastructure can help Australia take advantage of the opportunity that the Asian protein boom presents
The Agribusiness Bulletin
The Agribusiness Bulletin focuses on national and local industry, as well as cross-industry insights and trends. This includes some of the drivers we expect to shape the future of the industry and potential challenges that may arise.
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Enabling Australia's great cattle migration
Infrastructure has been identified as a key enabler to Australia’s ability to take advantage of the opportunity that the Asian protein boom presents for Australian agribusiness. See Australia’s current, next and future waves of growth, 2013–33
The themes of infrastructure and agribusiness interact directly in Australia’s beef production value chain – the efficiency of the value chain directly contributes to our cost-competitiveness, and its integrity contributes to our ability to maintain a clean, green image and supply differentiated, high value products for discerning international markets.
With all of this in mind, this article reflects on challenges of moving beef cattle in Australia.
Australia’s beef cattle sector is particularly exposed to the infrastructure challenge as a result of our extensive and geographically-dispersed production systems. While these extensive and diverse production systems allow us to make use of large parts of Australia that are relatively well-suited to beef cattle production, they come with significant transport costs.
For example, transporting cattle 320 kilometres by road (far and away the dominant mode of transport for cattle in Australia) to an abattoir in south east Queensland accounts for five per cent of their slaughter value (Goucher, 2011). And even this proportion of the slaughter value is likely an under-estimate of the cost of transport incurred throughout the value chain, for several reasons:
- Many cattle make long trips south for finishing and processing. Around a third of Australia’s cattle start their life north or west of Rockhampton, but many of these cattle are finished and processed in southern Queensland, and exported as boxed beef via the Port of Brisbane
- Most cattle are transported multiple times in their lifetime – between properties under the same ownership, between properties with different owners (for example, breeding enterprises to backgrounders), to saleyards and/or feedlot, and then finally to the abattoir.
Using National Livestock Identification Scheme data, ABARES estimates that there are in excess of 22 million cattle movements each year. As shown in the map below, which does not fully capture WA or NT cattle movements, cattle movements are concentrated towards the east coast. Not only is Queensland home to half Australia’s cattle herd, half the annual cattle movements occur within Queensland, or across its state borders.
Some of the national herd movement is by rail (for example, 230 government-subsidised services a year along certain Queensland rail lines), and a few via the long paddock (i.e. stock routes), but road is far and away the dominant means of transporting cattle.
CSIRO analysis, not surprisingly, confirms that:
- Larger capacity vehicles are cheaper than smaller capacity vehicles – road trains are around 25% - 30% cheaper than B-doubles regardless of distance travelled
- Longer haul distances are cheaper (up to 3 cents per head-kilometre) than shorter journeys. Granted, you can’t buy much these days for just 3 cents, but 3 cents per head-kilometre over a 1,500km journey – say Mount Isa to Brisbane – equates to an extra $45 per head in transport costs.
So if you have to move your cattle, and move them a long way, you would choose a road train as the most efficient and cost effective mode of transport. But only if you didn’t need to get your cattle into the zone approximately south of Rockhampton, east of Toowoomba (in Queensland), or east of the Newell Highway (in New South Wales). Despite this zone being the home to a large number of saleyards, feedlots and processing facilities, road trains are generally restricted within this zone and so smaller vehicles need to be utilised.
Which brings us to an important decision point for cattle moving across the road train boundary – do I transport my cattle on smaller, more costly trucks but get them there in one lift, or do I take a larger, more cost effective truck as far as I can and then split my cattle loads into smaller vehicles?
And if I choose to load-split at the road train boundary:
- Will the extra time taken to unload and reload the cattle mean my livestock then need to be further rested?
- Am I at risk of missing my allotted delivery window to feedlot, saleyard or processor?
- Are there appropriate facilities for holding, drafting and resting cattle?
- Can my truck driver also get appropriate rest at this point in the journey?
Improving the efficiency of beef supply chain must therefore include a robust discussion on the road network, particularly in rural and regional areas and the established routes by which cattle are transported. The Council of Australian Government Road Reform Plan of 2011 puts further perspective on why it’s so important for the broader economy (let alone the beef sector) for the road network to act as an efficient conduit:
“Australia’s road freight task is continuing to double every 20 years. However, unlike in previous decades, this growth is placing increasing pressure on an already strained road network, degrading road assets, increasing emissions (both air quality and carbon equivalents) and contributing to congestion. Road providers have faced pressures to maximize the use of their road assets in the face of these increasing demands. To the extent that these demands are unable to be accommodated, this has resulted in higher vehicle operating costs, reductions in productivity and consequential costs and lost opportunities to the economy and community at large.”
Hot on the heels of the Northern Australia Investment Forum held in Darwin earlier this month, the federal government is now seeking feedback on the design and operation of the Northern Australia Infrastructure Fund, and how $5 billion in concessional loans could be used to encourage and complement investment in northern Australian infrastructure.
And the value of getting the road infrastructure investment right is substantial. One northern grazier responding to the White Paper on Developing Northern Australia estimated that improving the Tanami Road (1,000 kilometres between Halls Creek and Alice Springs of which around 800 kilometres are currently unsealed) had the potential to improve the profitability of their business by up to $800,000 per year. Extrapolating this profitability uplift across just 10% of Northern Territory beef businesses (10% of the industry, according to ABARES farm survey data) could mean an extra $8 million per year to those grazing businesses.
If you are interested in some further reading on Australia’s annual cattle migration task, we recommend the recent ABARES report: 'Australia’s beef supply chains – infrastructure issues and implications'.