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By Matt Dalgliesh | Source: Auctions Plus, MLA, Mecardo.
Mecardo presented at the “Angus through the ages” conference in Albury last week, looking at the Angus premium. We have looked at the Angus premium in earlier Mecardo articles. However, this time we filtered the AuctionsPlus data on cattle sales for 100% Angus versus non-Angus breeds to isolate the purely Angus specific premium.
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In our earlier analysis of Angus premiums, we have compared the Auction plus sales to the broader cattle market, using the EYCI as a proxy indicator for the broader market. This analysis showed a premium existed, but the issue was how much of the premium was due to using the AuctionsPlus system and how much was due to the Angus breed.
Cattle sold on AuctionsPlus are offered in larger lines than cattle in EYCI saleyards and have more information attached, so it is probable that buyers are generally prepared to pay more for all breeds of cattle using the AuctionsPlus system.
We re-visited the analysis, this time focusing solely on cattle sold via AuctionsPlus and comparing cattle sold that had both sire and dam listed as Angus (100% Angus) versus all other cattle, excluding other premium cattle types like Wagyu. Figure 1 shows that 100% Angus breeds generally hold a premium over the non-Angus types.
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Statistical analysis of the historic Angus premiums on a cents per kilo liveweight basis highlights that on average 100% Angus cattle achieve 25¢ above the non-Angus breeds (Figure 2). Furthermore, the normal range for the premium is between 12¢-38¢, as identified by the grey shaded 70% range boundary. The 95% range boundary signifies that premiums above 50¢ or below 1¢ would be considered rare.
Applying similar statistical measures to the premium on a percentage spread basis shows that the average Angus premium sits at 8%, with a 70% range of 5% to 13% premium (Figure 3). Similarly, the 95% boundary shows that a move to a discount or above a 16% premium is considered rare.
Key points
* 100% Angus breeds on AuctionsPlus have held an average premium of 25¢/kg lwt (or 8% on a percentage spread basis) over non-Angus breeds since mid-2015
* The “normal range” for the Angus premium has fluctuated between a 12¢ to 38¢/kg lwt, or between 5% to 13% on a percentage spread basis.
* The recent narrowing of the Wagyu premium demonstrates that Angus breeders need to focus on provenance, traceability and quality assurance to stay ahead of the pack.
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What does this mean?
As has been shown recently in the Wagyu premium market, the presence of a quality breed branding doesn’t always carry a premium attached. Throughout 2018 the Wagyu premium deteriorated on the back of a flood of mediocre Wagyu F1 crosses.
Angus breeders need to keep ahead of the pack with a focus on provenance, traceability and quality assurance. The advancement in objective meat quality measurement tools offers both an opportunity and a risk to Angus producers. When the technology can provide an objective score for a range of preferred traits, such as IMF, Angus producers can show how their product is superior. However, if other breed types can also demonstrate similar scores to Angus then they can close the premium price gap.
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