Livestock

Embrace the future

by
June 15, 2017

The ‘‘time is right’’ for Australia’s beef industry to embrace forward marketing agreements as a tool to manage price and volume volatility and improve business planning, according to a recent research report.

The ‘‘time is right’’ for Australia’s beef industry to embrace forward marketing agreements as a tool to manage price and volume volatility and improve business planning, according to a recent research report.

Unlike other agricultural industries, the use of forward marketing arrangements which lock in agreed prices and/or volumes for future delivery of product is limited in Australia’s beef industry.

However, according to the report Forward marketing agreements — time to reconsider for the Australian beef industry, by agribusiness banking specialist Rabobank, there is no prohibitive reason to stop the increased use of forward agreements, but it will take a ‘‘change of mindset’’ to make it more commonplace in the beef industry.

Report author, Rabobank senior animal proteins analyst Angus Gidley-Baird, said the Australian beef industry was undergoing significant change, with increased volatility, rising global competition and pressures for safe and reliable supply making it increasingly important to manage price and volume variability.

‘‘It is even more critical this year, with local beef producers making investment decisions around whether to rebuild herds in a high-priced market,’’ Mr Gidley-Baird said.

‘‘In this environment, the use of forward marketing agreements could give producers some security around future prices and volumes, to help provide a more informed investment decision when purchasing cattle.’’

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