Live Export

Anticipation grows around China live export deal

James Nason, 07/11/2014

Excitement is building in the live cattle sector around the imminent announcement of a new feeder and slaughter cattle trade to China.

There has been growing speculation in recent weeks that long-running negotiations to develop a health protocol needed to underpin the trade have led to a draft agreement being reached between Australia and China, as reported by Beef Central earlier this week.

Livex 2With its huge population and booming demand for red meat, China is considered to be a market of major growth potential for Australian feeder and slaughter cattle exports, and the prospect of a new trade is fuelling strong interest throughout the industry.

The possibility of a breakthrough deal has been attracting growing media attention in recent days with reports suggesting a formal announcement is now likely to be made by the Chinese and Australian Governments after bi-lateral talks in Beijing this weekend.

Speculation in mainstream metropolitan media this morning that the trade would reach one million head, worth $1 billion, in year-one appear wildly inaccurate, however. Senior live export trade sources suggested a figure of 100,000 to 150,000 head in the first full year might be closer to the mark, with potential to grow from there.

A spokesperson for federal agriculture minister Barnaby Joyce told Beef Central overnight that an agreement has not yet been signed but negotiations over protocols appear close to being finalised.

“Negotiations between the Australian and Chinese Governments to establish feeder and slaughter protocols for live cattle exports to China are progressing well,” the spokesman said.

“These negotiations began more than 10 years ago and have been discussed in detail with Chinese government authorities over the last six months.

“These negotiations regarding health protocols and certification requirements for live cattle are not related to the current FTA talks, but rather to establish technical market access arrangements for Australian cattle imports into China, which like many nations has strict biosecurity requirements.

“We are confident that we are close to finalising protocols and certification requirements for this important market and will continue to work toward that goal.

“A formal announcement will be made by both the Australian and Chinese governments when the negotiations are finalised.

“Meanwhile our livestock exports are experiencing record-highs; from September 2013 to October 2014 this trade has been worth $1.4 billion for Australia.”

When the deal is announced, Australian exporters will have to secure approval for the feedlots and abattoirs they will supply in China under the Exporter Supply Chain Assurance System before they can ship cattle to the market.

The opening of the Chinese market would provide a welcome new source of diversification for cattle producers in northern Australia in particular, who have suffered from a heavy reliance on a single market in the past.

A report in the Australian today suggests the new agreement between China and Australia will specify periods of the year when live cattle from different parts of Australia can be shipped to China.

The article says that while bluetongue-free cattle from southern Australia will be allowed access year-round, cattle from northern Australia will be restricted to supplying animals during the few months of the year when the virus is less prevalent.

There may also be some zones of China where sheep flocks are common where cattle from Australia’s bluetongue zone — north of a line from Broome to Coffs Harbour — will not be allowed entry.

The full details on what the final agreement will entail are yet to be publicly released.

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Comments

  1. Tom Luckock, 09/11/2014

    I agree with Kamal. The Australian farming sector does seem to be over-excited by China. Since China signed the WTO there have been waves of euphoria driven foreign investment into China followed by, in many cases, disappointment. The US, European and other chambers and embassies in Beijing have had armies of people monitoring China’s WTO compliance to keep them honest. The question will be will Australia have the resources and leverage to do the same for the FTA – the embassy has a really good team in Beijing, so hopefully that part is looking good.

    Ultimately though, the key issue for beef has to be whether China takes a decision to prefer importers over the development of domestic beef champions. The jury seems to be out on this, but if you look at State Council research from last year there seems to be a move away from self sufficiency to recognising that some classes of food will need to be imported. However, if that is wrong, and China develops national champions, good luck to Australia’s exporters (they can join a long list of foreign investors/exporters wiped out by up and coming national champions). Thats why I think Kamals point is spot on, you cant neglect the traditional markets.

    Finally, I cant understand why more Australian producers arent looking for a strong minority Chinese shareholder. The yellow peril hype about foreign investment in farming is really short sighted and damaging. The companies that have a Chinese shareholder have to be best placed to access China. Importantly, they will be the ones that can navigate the non tariff barriers that get thrown up after the FTA is signed. They will be the ones that have the distribution channels in place within China and it is only natural that Chinese importers will prefer to source from their subsidiaries.

    Finally/finally, Trish I think you are brave to suggest that China’s 100s of steel mills and traders would work together to reduce demand to push down iron ore prices (Chinese steel mill herd instincts are more cat than cow)! I know little about mining, but it would seem Australia’s major producers who are ramping up production in the face of dropping demand are having more of an impact on pricing.

  2. Trish Brown, 08/11/2014

    More cruelty disasters on the horizon for Australian Livestock when our ignorant Federal Govt. signs the agreement with China who will duck and dive and ignore any animal welfare agreement that they are asked to honour.
    China will call the shots all the time and control the prices of animals to suit them just as they do when buying Iron ore from our country and livestock exporters will in return control the livestock farmers and pastoralists in regard to the prices….Oh YES! the prices will go Down, down, down for the growers and Up, up, up for the foreign owned exporting companies and Win, win, win for the Chinese as usual.
    Yes China has got Australia by the balls re: iron ore and it will do the same to farmers here and laugh all the way to the Bank! but the livestock will encounter hell at their hands before and during slaughter because this country has no animal welfare laws just as the many other countries who buy animals for slaughter or breeding don’t!!!

  3. Kamal Mac Nair Kidwai, 07/11/2014

    From the frying pan into the fire or vise versa?
    The recently concluded Livex conference in Melbourne & all the trumpeting about ESCAS. Would the Chinese conform to export protocols?history would say a big NO ! So then Mr & Mrs DAFF,RSPCA,AA,MLA what r ya gonna do about it? Instead of barking about breaches in Gaza etc & upsetting our traditional partners Indonesia & new ones Vietnam, take good care of them 1st instead of being enamoured by the chinese,how sick can you so & so’s in… get with statements like ;you can make plans for a new car or a new kitchen & the $$ are gonna come in soon.
    Case rested !

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