Economic contribution of the red meat industry

Value of red meat production

Red meat production and live exports of sheep and cattle accounted for nearly 22 per cent of the total gross value of Australian agricultural production in 2007-08. The contribution of red meat varies by state, ranging from 76 per cent in the Northern Territory (all from cattle) to 11 per cent in South Australia, where the value of sheep and lambs is the largest contributor.

5 Gross value of production - year ended 30 June 2008
	cattle and calves	sheep and lambs	total red meat	total agriculture	contribution of red meat to agriculture
	$m	$m	$m	$m	%
New South Wales	1 590	442	2 032	9 009	22.6
Victoria	1 232	869	2 101	11 778	17.8
Queensland	3 388	57	3 445	9 785	35.2
South Australia	252	347	600	5 248	11.4
Western Australia	488	410	897	7 199	12.5
Tasmania	160	42	201	1 118	18
Northern Territory	323	0	323	427	75.6
Australian Capital Territory	4	1	6	18	30.8
Australia	7 436	2 168	9 605	44 581	21.5
Source: ABS 2009b.

The contribution of cattle and sheep (both slaughtered and exported live) to the total value of Australian agricultural production has varied over time (figure f). Over the past 50 years the contribution has ranged from 12 per cent to 29 per cent. The trend over time suggests an increasing contribution of sheep and cattle toward the total value of agricultural production, particularly over the past 10 years.

Beyond the farm level, the red meat industry also contributes to the Australian economy. In 2006-07, the value added for meat processing in Australia was $1973 million.

In addition to meat, there is value derived from co-products. These include offal, tallow, hides and skins, meat meal and other rendered products. Co-products account for approximately 11 per cent of the value of a slaughtered animal (MLA 2009).

Export share

The value of red meat exports in 2007-08 exceeded $5.4 billion, with the value of live cattle and sheep contributing an additional $730 million to exports. Combined, the red meat industry and live exports contributed 22 per cent to the value of Australian farm exports in 2007-08.

Employment

The red meat industry is a substantial employer, with many people involved in the production of red meat in Australia, from livestock production to retail and marketing of the final product.

The red meat sector, from livestock farming to selling products at the retail level, employs up to 160 000 people across Australia (table 6). There are also many more people employed in industries that provide services and products, such as transport, machinery and feed, to the red meat industry.

6 Number of people employed in 2006 - by industry
Beef cattle farming (specialised)	48 175
Beef cattle feedlots (specialised)	570
Sheep farming (specialised)	20 714
Sheep-beef cattle farming	13 316
Grain-sheep or grain-beef cattle farming	31 486
Sheep, beef cattle and grain farming, nfd	867
Meat processing	24 456
Meat and meat product manufacturing, nfd	329
Cured meat and smallgoods manufacturing	6 317
Meat, poultry and smallgoods wholesaling	12 089
Fresh meat, fish and poultry retailing	22 925
nfd Not further defined. Source: ABS 2007.

Contribution to other industries

The red meat industry stimulates expansion of other activities including agricultural, manufacturing and services activities. This is through the use of products and services from these industries to produce and process live animals into beef, mutton and lamb. The extent of these contributions can be examined through the use of an input-output table. An input-output table illustrates the flow of goods and services among all sectors in an economy. The latest input-output table for the Australian economy, published by the Australian Bureau of Statistics (ABS), estimates the value of these flows for 2004-05. To allow a simplified and more accurate account of the links of the red meat industry with other industries, the analysis focuses on the meat processing aspect of the red meat sector.

The linkages of the red meat industry with other economic activities are represented in the input-output table as purchases by the red meat industry of inputs when producing meat products and as sales of meat products, including co-products and by-products, to industry users.

The red meat industry is a buyer of inputs

In the input-output table there are 109 sectors, with the processing of pigs, poultry, sheep and cattle all grouped into one meat processing sector (appendix A). The value share of cattle and sheep sold to the meat processing industry in 2004-05 was about 83 per cent.

The red meat processing industry is an important buyer of products from other sectors, including the agricultural, manufacturing and services sectors (table 7). In 2004-05, 71 per cent of the total value of sales of cattle (valued at $6293 million in 2004-05 dollars) was sales to the meat industry. The transport services sector, the container industry and detergent industry also sell products to the meat industry. A total of $13 billion worth of products and services were used by the meat processing industry during the period. Of this, about 69 per cent was in the form of animals purchased for slaughter.

7 Share of meat processing industry in total product sales
industries a	meat processing industry share to total product sales (%)	value of purchases  (2004-05 million $A)
Beef cattle	70.7	6 293
Pigs	58.8	503
Poultry	56.8	1 033
Sheep	28.6	1 202
Paper containers and products	3	165
Road transport	2.9	984
Soaps and detergents	1.4	24
Total		13 048
a See appendix A for industry descriptions. Source: ABS 2008b.

The sheep industry is less reliant on the meat processing industry with only 29 per cent of total sales in 2004-05 going to the processing industry.

The red meat industry supplies inputs

In addition to meat products, the red meat industry produces co-products and by-products such as hides and skins and oils and fats. These products are used as inputs into other industries. The cost shares of red meat products in the total intermediate input cost of other industries are shown in table 8.

8 Cost share of red meat, co-products and by-products – selected industries
industry a	cost share (%)
Bakery	10.83
Leather and leather products	10.37
Accommodation, cafes and restaurants	8.29
Soaps and detergents	7.23
Meat and meat products	6.48
Retail trade	5.38
Oils and fats	5.2
Other food products	3.67
a See appendix A for industry descriptions. Source: ABS 2008b.

The share of red meat industry products is highest in the bakery industry, accounting for an estimated 11 per cent of the total intermediate input cost. The cost share of red meat industry products is also high in leather manufacturing and in the soap and detergent industries. The oil and fat manufacturing industry is also dependent on the meat processing industry for rendered lard or tallow, with 5 per cent of its intermediate input cost being payments to the meat processing industry.

The red meat industry also plays an important role in the services industry such as retail trade and accommodation, cafes and restaurants. In the case of the accommodation, cafes and restaurants industry, purchases from the red meat industry represent 8 per cent of the industry’s expenditure on goods and services.

The accommodation, cafes and restaurants industry accounted for 32 per cent of total meat sales in 2004-05 (table 9), followed by the retail trade industry. Together, the two industries accounted for 64 per cent of the value of meat products used by other industries as intermediate inputs. Not surprisingly, the meat industry is affected by changes in accommodation and restaurant activities and retail trade.

9 Industries important to meat processing
industries a	share of industries to total meat sales (%)
Accommodation, cafes and restaurants	32.33
Retail trade	31.91
Meat and meat products	12.96
Other food products	3.91
Wholesale trade	3.53
a See appendix A for industry descriptions. Source: ABS 2008b.