PROCESSING a beast in Australia costs up to $120 more than in the US.
Teys Australia feedlots general manager Grant Garey said labour and rising utility costs were increasing pressure on beef processors.
While Australian processors could buy cattle cheaper than in the US and sell the end product slightly dearer, the margin for local meatworks was less.
Mr Garey said the industry had "a lot of work to do to be competitive".
And there was no move to pay less to producers for cattle to try to lift the profitability of the processing sector, at least not from Teys Australia.
"(Producers) can't afford to be paid less," Mr Garey said. "We need to be able to improve margins."
He said government policies, such as the carbon tax, had a "huge" impact on processors' profitability.
Mr Garey estimated implementing the carbon tax alone would cost the company hundreds of thousands of dollars.
He said the lack of a free-trade agreement between Australia and South Korea meant the US had a leg up over local processors.
"We (our company) has $240 million of business with Korea alone and that will come under pressure because the FTA is not signed," Mr Garey said.
He said he was still upbeat about the Australian beef industry and saw huge potential in some of the emerging markets, rather than traditional markets such as Japan and Korea.
"The Japanese ... population is ageing and not growing," Mr Garey said. "There are also plenty of financial challenges in Japan ... this market will stay tough."
He said that, in comparison, China was growing at an amazing rate. "It's taken nothing like the volume compared to the other countries but there has been a rapid increase in the amount it does take."