Beef 2018 Report

Beef exporters see need for stronger Chinese-Australian relationship

Liz Wells, May 14, 2018

MLA’s Michael Finucan, Nick Meara and Natalie Isaac with Stockyard Beef chief executive officer Lachie Hart during last week’s China/Southeast asia seminar session

 

THE China-Australia Free Trade Agreement may be in place, but beef industry sources say more work needs to be done to bolster existing arrangements and ensure a framework where Australia’s exports can expand to capture China’s increasing appetite for beef.

In his address to the Meat and Livestock Australia Global Markets Forum at Beef 2018 last week, MLA’s international markets general manager Michael Finucan, said the Australia-China trade relationship was presenting “some challenges”, largely because of its imbalance.

“It’s much more important to us than it is to China; they are the biggest market for us, and we are fourteenth largest to them,” Mr Finucan said.

“That translates into some of the problems we have.”

“We also need to continue to advocate the trade,” Mr Finucan said, adding added that the MLA was working hard on improving Australia’s relationship with China in terms of market access.

Those problems include registrations, accreditations and licensing of Australian plants which can supply China.

In a panel session following Mr Finucan’s address, Stockyard Beef chief executive officer, Lachie Hart said Australian officials had a role to play in alleviating the nervousness being felt by processors in the wake of China’s short-term ban last year on Australian beef from some plants.

“Considering it’s Australia’s number-one trade partner, I would have hoped the Australian Government had a better relationship with China,” Mr Hart said.

Need to import

Mr Finucan said China was a large and strong economy which was changing rapidly, and its behaviour was affected by China being home to 20 percent of the world’s population, but only 6-7pc of its fresh water and agricultural land.

“So they need to import product,” he said.

Mr Finucan said China’s Belt and Road policy was reconstructing trade routes to Europe and the Middle East, and also building pathways to South-East Asia, which would open up new regional markets.

“You will see other pockets of wealth and growth pop up in China.”

“As China shifts from a manufacturing to a consumption-led economy, that shift in behaviour is great for us.”

Price, familiarity and availability of product were all important to China’s imported beef market, and while pork was still the country’s biggest source of protein, beef consumption was where the fastest growth in a protein source could be seen.

“The perception of Australian beef is seen as most superior, and they don’t consider us as cheap.”

MLA research showed China’s food service sector was dominated by western-style dishes, and is competitive and price-sensitive, while beef and offal were selling into a more ‘experimental and brand-conscious’ retail market.

“We’ve got to have the right strategy to capture that. We’ve got to monitor these opportunities and …have the right program in place.

“We’ve got to understand the market is changing fast.”

“We’re seeing a shifting demographic, with growing demand for premium beef imports.”

MLA runs workshops and forums in China to promote Australian beef as suitable across the market, which its research has identified uses 45pc of its beef for braising and stewing.

Baking and roasting accounts for a further 17pc, stir-frying for 12pc, pan-frying for 9pc and grilling for 6pc.

South-East Asian growth

MLA’s global manager for industry insights and strategy, Natalie Isaac, told the seminar that beef consumption was set to rise 15pc in South-East Asia in coming years, but challenges existed.

These include tariff and safeguard measures in Thailand, Halal requirements in Malaysia, and a high level of regulation in Indonesia.

South-East Asia, including Indonesia takes around 11pc of Australia’s beef exports, which makes it Australia’s fourth-largest market, and this lifts to 13pc when offal and live cattle are included.

Ms Isaac said while fish and poultry were the biggest protein sources in most South-East Asian nations, markets within the region were diverse and unique.

“One third of Australian manufacturing beef exported goes to South-East Asia, and 26pc of total offal goes to Indonesia,” she said.

About the markets:

In 2017, Australia exported 110,059 tonnes of beef to China, with frozen grassfed on 73pc and grainfed on 22pc making up 95pc of the total.

Australia supplies 17pc of China’s beef imports, with brisket, manufacturing, shin/shank and silverside/outside making up 58pc of shipments.

Despite being the most populous country in the world, the proportion of consumers who can regularly afford to buy imported beef is small, with only 12.2 million households earning at least US$35,000/year disposable income.

That number is forecast to increase by 74pc to 21.2 million households by 2021.

In 2017, Australia exported 49,698t to Indonesia and a further 61,521t in total to other South-East Asian nations.

Total 2017 Australian beef exports to South-East Asia excluding Indonesia climbed 6pc from 58,203t in 2016.

Total Australian beef exports to Indonesia fell 19pc from 61,676t in 2016 in this market where Australia encounters significant competition from Indian buffalo meat.

 

 

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