This week, I was stunned and amazed to see the cost of beef in the supermarket. But a "sale" price of $32 per kilo for porterhouse (sirloin) steaks is hideous!! We had a customer contact us and let us know the eye fillet was $60 a kilo in their local. We know a number of people who have said to us that they can't afford beef anymore.
So what's happening? Why is it so? Basically, we are seeing the results of years of issues are culminating right now.
We have, as a country, engaged in agriculture that has not built the soil and cared for the land. We have allowed our soil carbon levels to be depleted, the soil to become packed down and dry. There was no resilience built in in the way paddocks and water were built in. As a consequence, when the drought came, most farmers had to choose between selling off stock for next to nothing, or shooting them when they had no grass.
Many of the smaller operators (like us) not only were not eligible for the drought package from government, and the feed supplied through "buy a bale" type schemes, but were unable to buy feed. Because much of the feed was already purchased by the "buy a bale" type schemes and was simply not available for purchase. We were fortunate to have a relationship with a small Lucerne grower who supplied all of his regular customers first - we couldn't get as much as we wanted, but we got enough to keep our cattle alive and in reasonable condition.
Many farmers literally went out of business. Without rain, there is no grass. With no grass, most cattle operators had nothing to feed their cattle. We know a number of beltie studs that closed. We were fortunate to buy several great breeding animals as a result at prices we could afford. Many bloodlines were lost as breeders were simply sent to the abattoir.
For some farmers (particularly the big operators), once they considered the cost to transport their stock to the sale yards and the price they got at sales, it was cheaper to shoot them. Basically, they lost money because the cost of transport exceeded the price they were paid at the sales. Best guess - tens of thousands of cattle were simply shot and buried.
Speaking honestly, that last 8 months before the rain started was very difficult. We were buying water in for the stock, and watching the paddocks and trying to make sure our cattle had enough feed to keep healthy, but conserving what we had to last as long as we could. There was no ability to buy feed basically. We had less calves on the ground this year as a result, and we weren't finishing beef the way we wanted. We did start to reduce stock, and we were about to start the acceleration of de-stocking when the rain arrived. Add in the difficulties associated with crossing borders in Co-Vid and the stress has been considerable over the end of 2019 and through 2020.
For those of us who were able to ride it out, there were increased costs associated with feed, supplements (think vitamins for cows!!) and sometimes water. But little or no income coming in. Many bloodlines carefully bred over many years have been lost or greatly diminished -sold for slaughter because they couldn't be fed anymore.
And now many areas have had rain. Good rain, soaking rain. Rain that has filled the catchments, moistened the soil at all depths and filled dams. Now some of us have an abundance of grass, and not enough animals to graze it!! A good problem to have really. But that means that farmers now have feed, and the opportunity to breed up and build up their breeding stocks that have been wiped out in the drought. Those who could kept their very best breeders and everything else was made into burgers. Now the plan is to build up the breeding herd again, and thus anything able to breed (so all the girls, and the better bulls) are being held onto. Cattle sale volumes have plummeted. From selling anything including your breeding lines (because selling or killing was the only option), to cattle farmers holding on to whatever they have that can breed in the space of a few short months.
Classic supply and demand economics says that when there is more supply of cattle from farmers (like in the drought when farmers were selling what they could) than demand for beef from consumers, the price goes down. What was heartbreaking was some farmers we knew were paid $0.33/kg for their animals. Good animals. Young, and in good condition. The steaks consumers were buying - still ranged between $15 - 25/kg in the supermarket. Where the money was going in between - well, I'll let you speculate. It certainly wasn't going to farmers!
Now? Well, farmers are getting a good price at the yards for those who have cattle to sell. Our price to consumers remains fairly stable, and overall likely about half the cost compared to what is available in the supermarket, but the catch is you have to buy a minimum of a quarter and fill your freezer. If you're keen to fill the freezer, please email us - we are starting to plan now for our next beef run in about 3 months. We are expecting to have more requests than available beef for the next run, so please do let us know if you are thinking about ordering as soon as you can.