The message today, much to the pleasure of the largest gathering of red meat producers in the southern hemisphere, from Westpac Senior Agri Economist, Justin Smirk was that history suggests periods of significant urbanisation lead to strong demand growth and a solid longer run positive trend in real beef prices.

 

Addressing the who's who of the beef industry in Rockhampton as part of Beef Australia 2009, Mr Smirk had drawn on 150 years of economic data to form his prediction that the future for Australia's red meat industry will be the best we have seen in decades.

 

Mr Smirk believes the urbanisation of China and India will drive a new commodity "supercycle" that can last to at least 2030.

"While it is widely known that China is the world's most populous nation, what is often missed is that it is also the world's largest consumer and producer of meat," said Mr Smirk.

 

"Although the pace of growth in demand for red & white meats (combined) is forecast to slow to 2% annualised, from around 2½% during the previous decade, beef demand is forecast to grow by 1.9%, up from 1.3%. The loss of momentum in this combined red and white meats demand is due to the moderation for pork and poultry, the main staple meats for Asia.

 

"Even if we make no assumptions on how Chinese diets may change over time, as China urbanises the consumption of meat will also rise. This is why the Food & Agriculture Organisation's (FAO) projects continued strong growth in global meat consumption out to 2015," he said.

 

"China also has the constraint of limited arable land - it has much less than the US but with a population four times greater. And urbanisation will not only result in the loss of arable land under cities, factories and highways but also lift the demand for fresh water. So while the Chinese may be able to lift beef production by utilising more intensive feedlot practices, there is a limit to how much grain and fodder can be grown in China.

 

Mr Smirk's forecast was tempered with some caution.

 

"History suggests that periods of significant urbanisation lead to strong demand growth and a solid longer run positive trend in real beef prices. But a word of caution - prices can be very volatile during these cycles and it would be a mistake to base budgets around record high prices only to see profits erode when prices hit an inevitable weak patch."

 

Westpac has been a proud sponsor of Beef Australia since its inception in 1988 and has partnered with Beef Australia 2009 to present the Property Tours, Women in Beef Seminar and Young Beef Achiever of the Year.