How the 1970s beef crash still shapes today's decisions

People weren't suggesting the fast and furious decline was anywhere near what was experienced 50 years ago.

Rather, it was a lesson learned back then - and then reiterated time and again since in drought periods - that was being referred to.

Stocking to the brim in boom times comes with unacceptable risk. Those who are forced to sell on a drastically declining market may never recover.

When El Nino was flagged last year, many producers decided to start offloading early. With the 2019 drought still on their minds, they didn't want to commit to seemingly endless feeding.

With the benefit of hindsight, some called those actions 'El Nino panic' and talked of lost opportunity.

But others, particularly those who lived through the 1970s crash, have a different view.

For more than a decade leading up to the great crash, genetic improvement and rising export demand saw Australian cattle numbers grow rapidly.

Meat & Livestock Australia records show Australian cattle numbers reached a peak of 33.4 million head in 1976.

The proportion of Australian beef production that was exported averaged 17 per cent in the 1950s, increasing to 28pc during the 1960s, and further to 33pc by the early 1970s, according to MLA records.

Globally, beef production was very high at that time.

Then came the 1973 oil price shock.

Steve Martyn has close to 50 years experience in most facets of Australia's export meat markets, is a former Australian Meat Industry Council senior executive, a newspaper columnist specialising in beef exports and wrote what is considered the bible of meat processing history in Australia 'World on a Plate'.

He said when oil-producing nations placed an embargo on the precious liquid on certain customers, it spelt disaster for Australia's beef business.

Oil prices rose 300 per cent overnight.

"In response, two of Australia's biggest export markets - Japan and Europe - closed their doors to imported beef to protect their currency and livestock growers," Mr Martyn said.

Global beef prices plummeted and fearing further losses, both Australian and US producers sold off their herd, setting off a downward spiral.

Cattle prices in Australia fell from around $350 a head to $40, Mr Martyn said.

At the time, Australia was experiencing excellent seasonal conditions so many producers attempted to hold on hoping the market would change.

All that did was draw out the pain, Mr Martyn said.

Within a couple of years, it was a situation of too much product and no markets to sell it to.

Allan Bloxsom has more than five decades in the red meat trade and is today chairman of Aus-Meat Limited, was working for big processor and exporter The Angliss Group at the time.

He described it as ugly.

"Angliss were extremely lucky - we had the benefit of trading offices in many countries enabling us to diversify in order to keep the wheels turning at processing plants in Australia however, the returns were so very heavily diminished," he said.

"There was no money in the beef supply chain."

Agents on the job in the 1970s described the crash as an absolute disaster and said it came without warning.

Allen Ramsey, Ramsey and Bulmer in Casino, had just started his career in Albury Wodonga.

"We were told overseas markets were gone and we were out on a limb," he said.

"The season was good right across the Eastern Seaboard so people could continue to hold stock without too much expense."

Many stories that have been told of vendors opting to take big lines of cattle back home from saleyards, only to sell them a year later for much less.

"Weaners were sold from $5 ($35 dollars today) to $20," Mr Ramsey said.

"I saw the same type of calves bought for $100 in 1973 sold a year later for $10.

"Producers went to town and found themselves a job. You were lucky if there was an abattoir in your town."

In 1976, Mr Ramsey returned to his hometown of Casino where he worked with his father, Fraser Ramsey. The market was still at rock bottom.

"Bobby calves were making as much as eight-month-olds because the veal market in Sydney and Melbourne wasn't too bad, so people took that avenue," he said.

"It took years for things to turn. Some survived in the cattle business, many didn't."

Peter Austin, who was branch manager with Winchcombe Carson at Crookwell in the 1970s, said the yardings became mammoth as people were forced to cut their losses.

"It seemed the market was bottomless," he said.

"What was saddest was that it came at the end of a boom when people were stocked up - beautiful Hereford steers going for a song.

"It did, however, iron out the places where cattle shouldn't have been getting fattened, the country carrying cattle that just wasn't suited to it - that was a situation that had grown up out of the boom.

"Fortunately wool was recovering at the time, so some were able to switch back to what they'd been calling ground lice during the beef boom years."

MLA's records say the situation was replicated in other major cattle industries around the world and both the US and Canada became very protective of their industries.

Export demand for Australian beef became virtually non-existent for a period.

Supplies of beef on the domestic market increased markedly, which saw retail prices fall to extremely low levels and Australian beef consumption spiked to 60 kilograms per person per annum.

That level of consumption is still lamented today.

By 1980, the cattle herd had declined by 6m head and then with drought it fell further as the 1980s progressed.

Mr Martyn said 11m head were effectively removed from the Australian herd during that time.

"When rebuilding started to occur, we had too much processing capacity and a rationalisation began," he said.

"Within a decade, that resulted in over 90 facilities closing their doors.

"There was a lot of pain and aggravation, especially in country towns where processing was a big employee.

"But what we ended up with was a much more efficient, globally-focused and globally-competitive sector."