How important are transport costs in beef production?

Fig. 1: Transport distances, means and costs to final delivery site (source: agri benchmark)

Fig. 2: Cost of production and transport costs to first delivery site (source: agri benchmark)

The transport of live animals and chilled meat is accompanied by a number of challenges. For this reason, both the costs associated with transport and the role of transport distances and conditions for selected countries of our partners were examined in a workshop at this year's Beef and Sheep Conference in Ireland.

On the one hand, the challenges for transport can be found in the great distances in large area countries, for example Australia. On the other hand, transport conditions can also be a major challenge. These include underdeveloped infrastructures such as poor roads, poorly developed rail networks or outdated vehicles, for example frequently found in Brazil. In addition, legislative restrictions may also negatively affect the transport situation. Another challenge can be seen in the transport of small numbers of animals that have to be collected at many different locations, thus extending transport times.

Fig. 1 shows the transport distances, means of transport and costs to the final destination for selected countries. It can be stated that the transport costs per tonkilometer (tkm) for lorry transport are similar in the different countries. The transport of live animals is more expensive than that of frozen meat and for very short transport distances the cost per tkm is higher as the cost of loading and unloading is distributed over a shorter distance. Transport costs per tkm are obviously lower for ships than for trucks. The costs vary from USD 27-78 per 100 kg carcass weight (CW) to the final destination. It should be noted that total transport costs are not necessarily higher with longer distances.

Fig. 2 shows the costs of production on farm-level and the transport costs to the first delivery site, which is mostly the slaughterhouse. It can be seen that the share of transport costs to the first site in total costs ranges between 0.3 and 3 percent. The share of transport costs to the first delivery site in total costs of production is therefore to be interpreted as very low. For this reason we will not analyse transport costs in a systematic or permanent way but on demand.      

The share of transport costs to the final destination (import port, city of consumption) in total costs ranges between 0.3 to 14 percent for selected destinations. However, we are not considering the transport cost to the final destination in our evaluation, because we usually do not know the proportion of beef going from individual farms to specific destinations.