Oct 20, 2026 · 26 min · 8 segments
The general sentiment in the beef industry is that we are in good times. But many producers probably aren’t making the profits they should be. More wealth is being created from land appreciation than…
Libby PriceHost
Diana BarkerGuest
Ian McLeanGuest
Fiona ChambersGuestGarry CookGuest
Gabrielle Hodson
Now, this is a really surprising report in that I think the general feeling in the beef industry is that it's going pretty well.
But you make it sound as if they're really only making money out of their land values.
Oh, it is going well, Libby, and it's fantastic at the moment with the high prices that we're seeing and some areas in the north here are starting to get some rain.
What we've done is take a long-term view through the full cycle of seasons and prices.
And yes, for the average producer, they're not making, we don't think, high enough profits.
And this report looks at what those that are making high profits are doing and what the rest of the industry can learn from them.
The top performing businesses have more productive herds that are more effective at turning grass into beef.
They spend money on their herd where it's going to give them $2 or $3 back for every dollar they spend, and they don't spend it if they're not going to get that return.
That all combines to give them a more productive herd and a lower cost of production and therefore more profits.
Though you do say even the top 25% with long-term average operating returns of 2% to 3%, they can't afford to have too much debt before all their working capital is used to service debt.
Well, that's right, because we're getting good returns long-term, but a lot of the returns are coming from land values.
We need the profits of the business of what funds interest reinvesting in the business and capital expenditure, funding growth, succession, retirement.
And with, yes, operating returns of 2% to 3%, we can't have too much leverage before too much of that gets consumed in servicing that debt, Libby.
How much does it differ from the northern beef industry to the southern beef industry?
Now, this is a really surprising report in that I think the general feeling in the beef industry is that it's going pretty well.
But you make it sound as if they're really only making money out of their land values.
Oh, it is going well, Libby, and it's fantastic at the moment with the high prices that we're seeing and some areas in the north here are starting to get some rain.
What we've done is take a long-term view through the full cycle of seasons and prices.
And yes, for the average producer, they're not making, we don't think, high enough profits.
And this report looks at what those that are making high profits are doing and what the rest of the industry can learn from them.
The top performing businesses have more productive herds that are more effective at turning grass into beef.
They spend money on their herd where it's going to give them $2 or $3 back for every dollar they spend, and they don't spend it if they're not going to get that return.
That all combines to give them a more productive herd and a lower cost of production and therefore more profits.
Though you do say even the top 25% with long-term average operating returns of 2% to 3%, they can't afford to have too much debt before all their working capital is used to service debt.
Well, that's right, because we're getting good returns long-term, but a lot of the returns are coming from land values.
We need the profits of the business of what funds interest reinvesting in the business and capital expenditure, funding growth, succession, retirement.
And with, yes, operating returns of 2% to 3%, we can't have too much leverage before too much of that gets consumed in servicing that debt, Libby.
How much does it differ from the northern beef industry to the southern beef industry?
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