A peek at life without feedlots – it’s scary

A peak at life without feedlots - it's scary


BeefEx economic modelling adds up what feedlots mean to Australia's economy.


TAKE away Australia’s feedlot industry and you would be ripping from the economy the equivalent of building another Sydney airport.

In the absence of the feedlot sector, gross domestic product would be a whopping $10.3 billion lower in 2029 - half a per cent of Australia’s GDP.

The national economy would also lose 49,000 full time employees.

The real economic value in Australia’s feedlot industry was in the activity it supports elsewhere in the economy, an independent study into the sector’s impact has revealed.

Micro economist Daniel Terrill, from prominent commercial advisors Deloitte Access Economics, said the most powerful economic narrator for the industry came from considering how things would be if feedlots didn’t exist.

His firm created just that scenario as part of a wider analysis of the impact the grain fed business. The above figures were the key findings.

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Mr Terrill, who grew up on a family beef breeding farm in Victoria, presented the results of the work at this year’s Australian Lot Feeders’ Association annual conference, BeefEx 2018, in Brisbane this week.

He described the impact as “frankly very scary numbers” and said traditional standard ways of measuring economic value sold short the feedlot industry.

“If we just look at the industry itself we miss a lot of the value,” Mr Terrill said.

Micro economist Daniel Terrill, from prominent commercial advisors Deloitte Access Economics, speaking at BeefEx 2018.

Micro economist Daniel Terrill, from prominent commercial advisors Deloitte Access Economics, speaking at BeefEx 2018.

A world minus feedlotting would fundamentally change grazing herds and farm enterprise structures, the Deloitte analysis showed.

Fewer cattle would be turned off grazing land, leading to reduced industry productivity.

“Thanks to feedlots, graziers can focus on doing what they do best. With less land needed to fatten cattle more can be used for backgrounding and breeding,” Mr Terrill said.

“It’s also plausible that feedlots mean we can graze cattle on marginal country that otherwise wouldn’t be viable to farm.

“On the processing side, without feedlots there would be greater seasonality of cattle supply - so lower consistency - resulting in lower utilisation of capital.

“Lower average slaughter weights for pasture-finished cattle would result in reduced processing efficiency.”

The key data fed into the study focussed on 2017 results showing the feedlot sector turned off 2.89m cattle, averaged just over 1m on feed at any one time and had an average utilisation rate of 81 per cent.

A record of 40pc of Australia’s cattle slaughter was delivered via the feedlot industry last year.

Lotfeeding was an industry defined by exceptional reliance on two inputs - cattle and feed, which account for 90pc of costs, Mr Terrill explained.

It is also an exceptionally low-margin business.

Last year, it contributed a total of $4.4b to GDP and supported 31,000 jobs.

It directly contributes half a billion dollars to the economy through wages and payments to capital and indirectly $3.9b through the purchase of business inputs.

“The ratio of direct-to-indirect contribution is comparatively low compared to other industries, which is driven by low employment and margins within the industry and the large quantity of feed purchased and beef cattle turned over,” Mr Terrill explained.

Another part of the Deloitte study looked at the economic contribution of an individual feedlot.

It showed a 30,000 head feedlot in southern Queensland contributes $22m a year locally, or within a 75 kilometre radius, but $101m nationally, showing the extent of the flow-on effects.

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The story A peek at life without feedlots – it’s scary first appeared on Farm Online.


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