Profitability of the Australian Beef Industry : A Break-Even Analysis

Profitability of the specialist beef production in the Australian Beef Industry is undertaken using a break-even model. The results reveal that during the financial years 1991-1996, the specialist beef producers were operating above the break-even level in the states of South Australia and to some extent in Queensland. They were operating marginally below the profitable break-even level in the states of New South Wales and Tasmania. In all other states and Northern Territory, they were facing losses and financial crisis. However, during the financial years 1993-1998, the beef producers in Queensland, South Australia, Northern Territory and Western Australia could cross the break-even level. Beef producers in all other states continue to face financial crisis. In all the states and Northern Territory beef producers were not able to fully recover the imputed value of their family labour. The producers were underpaid entrepreneurs and the industry is apparently surviving by trading on capital and or other off-farm income. Increase in production and cost control measures are possible options to improve the profitability. Although the findings provide a view of financial profitability of the specialist beef production in general, the situation may be different in specific cases. The study also reveals the usefulness of the break-even model in management decision support