After experiencing the resources rout of recent years, Australian investors have been forced to look elsewhere for returns. One sector that has garnered a great deal of interest in recent years is agriculture. In Australia, talk of the agriculture sector brings to mind images of cattle stations and Jackaroos. But pastoralism is perhaps an example of an area of agriculture that is not quite all it is cracked up to be. Studies have shown that producing just one kilo of beef can require up to 15,000 litres of water, making the livestock industry one of the most water-intensive agri-industries. Given that Australia is one of the driest continents on the planet, a question mark hangs over the sustainable growth of this industry. But there is one particular area of agriculture which really does look to be set for a boom, and unlike the rather niche cattle industry, this is one in which all states across the nation will be able to share. Read the attachment for my views on the broader Australian Horticulture sector.
Bill Moncrieff
How do you come up with the figure of 15000 litres of water per kilo of beef. Could you share with us your calculations for this claim?
Patrick Fresne
Hi Bill. On the original article, there was a link to the relevant website but the link hasn't come across in the PDF format. My comment regarding the water usage is sourced from the following webpage: http://www.theguardian.com/news/datablog/2013/jan/10/how-... The figure regarding beef and water is taken from the table in the middle of this article.
Patrick Poke
Hi Bill and Patrick. I thought you might be interested in another source I came across as well that seems to support the other Patrick's claim. "Producing 1 kg rice, for example, requires about 3,500 L water, 1 kg beef some 15,000 L, and a cup of coffee about 140 L" Source: World Water Development Report 2012. http://www.unwater.org/topics/water-and-food/en/
Bill Moncrieff
2 Patricks, I am a very small beef farmer outside wagga, produce about 80000 KGs carcase weight per year. You are saying that I use 1.2 billion litres of water. Thats absurd! You cannot just quote any claim on the internet, you have to do some research.
Patrick Fresne
To produce a kilo of grain requires over 1000 litres of water- so it is the production of feed for the animals which uses the most water, not the direct water consumption of the cattle. The livestock industry is particularly vulnerable to weather extremes due to the water intensity of the industry, which is part of the explanation for the poor performance of the listed beef producers over the years. Australia's oldest listed beef company, and one of the largest, AACo, hasn't paid a dividend since 2008. And this from a company which owns around 1% of the land in Australia and has a market cap of over 700 million. If you are looking at the beef industry from an investing perspective (which is my concern) it is hard to avoid the fact that the industry has had a less than impressive track record. Unfortunately the poor performance of the likes of AACo has put Australian investors off agriculture investments in general, as the investor community doesn't seem to make a distinction between different agricultural segments.
Patrick Poke
Bill, I in no way meant to question your personal experience. I understand that these figures can vary greatly depending on whether the cows are grain fed or grass fed, and whether irrigation is used. Thanks for engaging with us here, your input definitely adds another dimension to the conversation.