WA went against the national trend in terms of feedlot cattle numbers in the period to June.
The Australian Lot Feeders Association has released the June 2021 figures for the number of cattle on feed nationally.
The figures show a sharp jump in total cattle numbers on feed but raise questions as to whether the Western Australian part of the sector is missing an opportunity.
Australian cattle on feed numbers lifted nearly 17 per cent from March to June, with 1,173,652 head of cattle reported in the nation’s feedlots.
Queensland and Victorian feedlots accounted for the largest percentage gains, with numbers in Queensland up 31 per cent and gaining 13 per cent in Victoria.
NSW and South Australian figures remained relatively static, while WA posted a 32 per cent decline in cattle on feed.
The June quarter figures from ALFA show that WA cattle on feed numbers sit at 38,350 head, down from 56,782 head in March 2021 (although it is not uncommon to see cattle on feed numbers decline in WA from March to June).
Indeed, the normal seasonal pattern for cattle on feed in WA is for numbers to decline gradually from the start of the season to the September quarter, before staging a rebound in the December quarter.
Despite WA currently having feedlot capacity estimated at nearly 74,000 head of cattle, the capacity utilisation ratio of the state’s feedlots slipped from 77 per cent in March 2021 to just 52 per cent as of June 2021.
Essentially, WA feedlots are sitting half empty.
The lift in total Australian cattle on feed volumes lifted the national capacity utilisation ratio from 69 per cent to 81 per cent, which is the highest level achieved since December 2019.
Queensland, which holds the most cattle on feed in the country at 60 per cent of the national share, also dominates the capacity utilisation ratio with its feedlots at 85 per cent capacity.
Yet Queensland only contributes between 5 per cent and 7 per cent of the national grain harvest.
In contrast, WA annually produces between 35 and 50 per cent of national grain production, but only accounts for 3 per cent of the national total of cattle on feed.
This wasn’t always the case. In the mid 2000s, the proportion of cattle on feed in WA was sitting closer to 8 per cent of the national tally with nearly 70,000 head of cattle reported in feedlots and a capacity utilisation ratio of 75 per cent.
Since 2013, WA feedlot capacity has reduced from 117,000 head of cattle to just less than 74,000 head as of June 2021.
Is there a missed opportunity for WA to value add their massive grain production by pouring it down the throats of hungry cattle and turning it into prime quality exportable grain-fed beef?
Unfortunately, there is a supply chain hiccup in the form of a small herd size and limited processing capacity in WA.
Part of the reason that Queensland dominates the national feedlot market share is because it is where most of the cattle live, with Meat and Livestock Australia’s cattle distribution map confirming that 45 per cent of Australia’s cattle reside in the Sunshine State.
In comparison, only 8 per cent are in WA.
The other crucial supply chain factor limiting WA feedlot expansion is the size of its meat processing sector.
Currently, according to Australian Bureau of Statistics cattle slaughter figures, WA accounts for just 6 per cent of the national cattle processing total.
Queensland, the feedlot and cattle herd giant, accounts for 46 per cent of national cattle processing volumes.
So, for now it seems to be a case of feedlot fortunes favouring the big rather than the brave.
Or perhaps it’s just a classic case of doing what you do best and playing to your comparative advantages, to borrow an economic trade phrase.
WA will grow the grain and Queensland will make beef, while the sun shines.
• Matt Dalgleish is a manager of commodity market insights at Thomas Elder Markets (TEM)
