The GVP of the industry increased by an estimated 6% to $2,729 million, with decreased supply offset by an improvement in prices. 2019-20 was a year of two halves. The first half of the year remained very difficult for beef producers with a continuation of very dry conditions compounded by significant bushfires over summer. However, widespread rain from February 2020 provided some relief and significantly pushed up prices, especially for restocker type cattle.
The NSW DPI Cattle Tick Program works to keep NSW tick-free through movement controls on animals from tick infested areas, implementing strategies to eradicate outbreaks of ticks and tick fever and updating industry on developments in cattle tick control. Cattle tick is the most serious external parasite of cattle in Australia, with an estimated annual cost to the industry of more than $160 million. Cattle tick is a notifiable disease under the NSW Biosecurity Regulation 2015.
With dry conditions persisting at the start of the year, slaughter remained elevated. By December 2019 the female slaughter rate was up to 55% and total slaughter was up 5% on the previous year’s already high levels as producers sold core breeding stock to manage the dry conditions. However, widespread rain from February 2020 provided producers with some relief and monthly slaughter levels dropped significantly peaking at -29% year on year in May 2020 115. As a result, production dropped -4% during the year 115.
Overall prices rose by an estimated 10% during the year. Prices declined slightly over the first six months of the year however remained reasonably resilient given continued severe drought conditions. Finished stock were in short supply and attracted a premium. Widespread rain from February changed the market dynamics and all prices rose sharply. Producers competed fiercely for restocker type cattle including light steers and heifers and light or pregnant cows. The restocker steer to heavy steer premium increased from one of the largest discounts on record (39 cents lwt in October) to the largest premium on record (102 cents lwt) in March 2020 115.
By the end of the year there was some disconnect between local prices driven by restocking activity and international prices as COVID-19 created significant disruption in the international supply chain. Farmgate prices for feeder steers in Australia were more expensive than anywhere other than the US by the end of the year.
Australian and NSW exports remained very strong during 2019-20. The value of NSW exports increased 17% to $2.1 billion. Continued robust international competition supported prices and NSW volumes increased 5% to 229,000 tonnes 94.
China was once again the main driver behind export growth. Since 2015 the value of beef exports from NSW to China have grown at compound annual growth rate of 33% 94 per annum. China has been the largest destination for Australian and NSW beef since 2019. Whilst a global protein shortage created by African Swine Fever was undoubtedly a major driver of the strong Chinese demand, higher value chilled beef continued to make up a higher proportion of total exports, growing 137% by value during 2019-20 to reach 19% of the total exported. The volume of exports to all our other major markets in Japan, South Korea and the United States, declined 9% reflecting lower production and a shift in share to China. However, a lower currency and strong international pricing supported the value of exports to these countries, rising 5% year on year 94.
Improved seasonal conditions will provide much need relief for NSW beef producers. The very high prices being paid by producers as they restock, and lower supply is creating some challenges for the processing sector especially as our major export markets face some significant economic challenges due to COVID-19. Continuing trade tensions with China are adding to the uncertainty for exporters. Nevertheless, farmgate prices are expected to remain high for most types of cattle in the immediate future though finished stock may weaken if the global economy continues to suffer due to COVID-19. Production is expected to be lower in 2020-21 as producers retain stock. One puzzling factor is that, despite the improved conditions in the latter half of the year, the female slaughter rate remained stubbornly high as very high prices for cows appeared to encourage producers to sell. The extended period with high a female slaughter rate is expected to delay herd rebuilding.