Productivity in the beef industry – how it measures up

In their annual productivity report, ABARES define productivity growth as the increase in an output beyond associated increased input use, and use a measure of total factor productivity (TFP; ratio of gross output to total inputs). While long-term TFP growth is indicative of efficiency in a farm business, short-term measurements of productivity growth are sensitive to weather variability.

In the Australian beef industry, productivity growth averaged 1.3% per year from 1977-78 to 2014-15 – outputs increased by 1.1%, while inputs declined by 0.2% per year.

Improved pastures, herd genetics and disease management were all contributing factors to the lift in total factor productivity, with lower mortality rates and increased branding rates realised as a result.

The aforementioned factors, combined with industry infrastructure and proximity to markets, differ significantly for beef producers in northern and southern Australia. Productivity growth in northern Australia averaged 1.4% per year from 1977-78 to 2014-15, while southern beef farms averaged 0.6%. The difference was largely due to greater use of fertilisers and chemicals in southern Australia, while inputs were lower in the north.

Greater climate variability in southern Australia can also lead to more exposure to drought conditions – impacting output growth as a result of destocking and restocking cycles. Furthermore, lower average productivity growth is likely to be more apparent in southern regions as enterprises tend to be smaller and less profitable, in general.

For more details on productivity growth, see an earlier article on productivity in the Australian sheep industry.