Cattlemen On Verge Of Extinction
by Des Houghton The Courier Mail 24th July 2010

IS THE beef industry doomed? Will cattlemen pack it in for work in the mines? Will Australians one day have to import their beloved rumps and T-bones from Argentina or Brazil?

As ludicrous as this sounds, the beef industry is in real strife. Over-regulated and taxed to the hilt, cattlemen and women are fighting for survival. A new study has found cattlemen are getting 20 per cent less for their beef than they were 20 years ago.

More than 500 leading Queensland producers met last week at Paradise Lagoons near Rockhampton, one of the nation's showpiece cattle properties, to hear the bad news.

"It is a very, very tough outlook for the Australian beef industry," says Norman Hunt, of Hunt Partners Solicitors in Sydney. "There were whispers of doom. Unless we make changes, cattle producers are saying they cannot survive another 10 years."

Hunt and his firm have crunched the numbers.

"The problem is the cattle producers now have two or three things working against them at once," he says. "The resources boom has driven up the Australian dollar while interest rates are the highest in the world. As well, cattle producers in this country face higher costs and government charges than their overseas competitors. And their competitors have access to cheap development money."

Hunt says the battle for survival in rural Australia extends beyond beef to just about all food producers. He points out the obvious, which seems to have escaped state and federal governments:

"The resources boom is not going to last forever."

The Paradise Lagoons rally was a follow-up to the beef industry's "new direction" forum, which attracted 1000 indignant cattlemen to Armidale earlier this year. Paradise Lagoons is one of seven massive cattle stations owned by beef baron Graeme Acton and his family.

"If we want this nation to be a food producing nation we have to unburden the producers from all the government costs that don't apply to rival producers in the USA, Brazil, Argentina and New Zealand," Acton says. "It's not just beef, it's grain crops and other food commodities."

Acton joined other big beef families with names such as McCamley, Hughes, Galloway, Keats, and Bonfield in calling on governments to lift an assortment of taxes and charges as a matter of urgency.

I doubt if Prime Minister Julia Gillard or Premier Anna Bligh would have a clue about this dangerous slump threatening rural towns.

And do they know our cattlemen and women pay $9.80 in levies for every beast slaughtered, compared with $1 a head in the US?

There is the Meat and Livestock Australia transaction levy of $1.50 a head — which actually amounts to $2.46 for each animal, considering they are traded an average of 1.64 times.

Australian cattlemen and women make direct payments for statutory levies such as the National Livestock Identification System and Australian Quarantine and Inspection Service abattoir inspection fees.

Hunt reports an increase in Australian quarantine inspection costs of $1.50 a head next year will bring fixed government charges to $19.30 a head without taking into account payroll tax, workers compensation, or environmental charges.

With 28 million head of cattle, it's big bucks.

Beef export revenues suffered as the Australian dollar climbed in value in recent years. The dollar has risen 37¢ — or 73 per cent — from US50.5¢ in 2001 to US 87.7¢ last month.

While Australian cattlemen are bleeding, their counterparts in Europe, North America and South America are heavily subsidised. Compare the plight of our cattlemen to the Australian car industry, which got a $6.2 billion bailout during the GFC. The beef industry got zilch.

This is more evidence of Labor bias against rural Australia especially when you learn there are far more people employed in Australian rural industries than in the car industry.

Of course the car workers are in Labor electorates and there are few votes in the bush for the ALP. So the country-metro gap is widening.

Rural communities that rely on the profitability of the beef industry are in steady decline, saved only in some pockets by coal seam gas exploration.

Acton says he recently sold a mob of bullocks for $3 a kilogram — less than he got 20 years ago. In that time government charges, labour, water and electricity costs have doubled, while road and rail infrastructure has deteriorated.

The Hunt report confirms real cattle prices declined by 2 per cent a year during the 1980s and early 1990s and, in real terms, cattle prices are still more than 20 per cent below prices being paid 20 years ago.

Meanwhile, farmers in China have access to low-interest development bank finance.

This year the Brazilian Government, through its Development Bank, offered $US54 billion to its farmers in low-interest loans.

While this has been happening, the big four banks in Australia have disgracefully deserted the bush.

Bank lending for rural industries dried up after the GFC. So there is little chance of expansion or innovation.

Last year, Australia exported $4.3 billion worth of beef to more than 100 countries.

There are 59,893 properties with cattle. Their future is bleak.

So how do we rescue rural Australia? A new federal government could start by abolishing ridiculous inspection charges and levies.

The next step would be the introduction of a genuine plan for decentralisation.

By providing zonal taxation, stamp duty and other incentives for businesses to relocate into rural and regional Australia, the feds would also reduce pressure on our overcrowded cities.