Increased slaughter due to drought

13 July 2007

Australian cattle slaughter for 2006 was 7.93 million head - an increase of 300,000 cattle over the previous year. This is the highest recorded since 1998 when, coincidentally, Australia was last in a severe drought. The largest increases in cattle slaughter have been in the eastern states where the drought has been the most severe.   John Gorman, president of the Australian Hide Skin and Leather Exporters' Association, told delegates at the annual meeting of the International Council for Hides Skins and Leather Traders Assocations, which preceded the APLF in Hong Kong, that the ongoing drought is of major concern to meat processors and the hide industry. Three years of very dry seasons will affect cattle supply for 2007 even if and when good rains eventuate. Cattle numbers are low with many western Queensland/NSW properties bare of stock (including sheep). The Feed lots are constantly full but grain prices are very high due to the scarcity of grain supply in Australia. Thus the conversion of store cattle to fat cattle is now a fine margin. Of the recent slaughter only 30% are females thus there is an expectancy of strong herd rebuilding once the drought breaks - this will be particularly so across the northern part of the continent.   Domestic prices for cattle hides are very variable with movements of up to 15% in any one month. There is strong demand from the wet-blue processors in their endeavours to maintain production levels as well as from hide traders selling mostly into the Chinese market.   One large meat company in Queensland has expanded its wet-blue tannery in order to process all their own hides from three abattoirs at the one factory into either wet-blue or brine cured - this has taken approximately 7,000 hides per week from the domestic trade since the beginning of 2007.   Over recent times the industry has seen the establishment of Chinese based hide processors in Australia with direct links to large leather finishing and manufacturing corporations in China. This has significantly changed the dynamics of the hide industry in Australia with very active competition for the available hides.   Sheep and lambskins   The continuing drought is forcing farmers to sell off stock with a resultant slight increase in slaughter rates for 2006 as against 2005. This amounted to 30.7 million in 2006 whereas the figure for 2005 was only 29.8 million.   Live sheep exports to the Middle East are expected to maintain the 2006 level of 4.2 million. Competition for skins is extremely strong, especially from Chinese operators based in Australia and an ever increasing Australian dollar.   The membership of AHSLEA stands at 44 companies. Gorman is also immediate past president of ICHSLTA and at this year's meeting was additionally appointed as honorary life president.   Gorman told Leather International during the APLF show that the current drought is the worst for fifty years. In a country of around 20 million people and 95 million sheep, there is a great need for torrential rainfall. If they ever get the looked for substantial rain it will take one to two breeding cycles before animals will come freely to the market once more as farmers will need to restock.  

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