The first shipment of cattle from Australia to China under the feeder/slaughter cattle protocol struck in July 2014 is likely to occur in the first few months of 2017.
The trade opened 18 months ago but only three small air-consignments of slaughter-weight cattle have been delivered since then, two by Elders and one by Frontier.
Those consignments have played an important role in commissioning the new trade, allowing both sides to test and work through protocol issues with small volumes of cattle.
Several factors have delayed the commencement of larger sea-based shipments to date. In particular these have included the need for Chinese importers to build segregated supply chains to exclusively handle imported cattle, as the protocol requires, and also the high cost they must currently pay to buy Australian cattle.
However, the barriers that have blocked the trade’s development to date now appear to be easing.
A number of new cattle handling facilities have now been built or are close to completion.
The Department of Agriculture has confirmed to Beef Central this morning that four supply chains in China have now received ESCAS (Exporter Supply Chain Assurance System) approval to start receiving Australian cattle.
Importers will be eager to start filling those supply chains soon so they can begin generating a return on their considerable investments.
Their main consideration now will be economic in nature: Can they buy Australian cattle at a price that allows them to make a profit?
If the recent easing trend in Australian cattle prices continues, Chinese orders for 450-480kg cattle from Southern Australia would be expected to start growing in the new year.
However, it will be unlikely to see one of the big 20,000 head ships being filled for China for some time to come yet.
Protocol restrictions dictate that slaughter cattle imported to China must be processed within two weeks of arrival.
This will restrict initial shipments to small consignments, limited to perhaps 1500-3000 head.
In time exporters are confident China will transition to become a large market for feeder cattle, but early shipments are expected to be limited to heavier (ie 450kg average) ready-to-slaughter cattle, sourced from southern Australia.
In the past week there has been talk that one exporter was preparing to ship a consignment of slaughter-weight Angus steers from Portland to China before Christmas, which would have represented the first shipment under the protocol.
However, it is understood that shipment has now been pushed back until early in the new year, to avoid the challenges of trying to manage a high-pressure first-shipment over the Christmas holiday period.
“It would appear that a shipment to China is imminent but it will happen early next year,” one high-level trade source told Beef Central this week.
“It is going to require all hands on deck to ensure it meets every element of the protocol and is a success.
“Trade members very conscious of not rushing and going too soon, because it is very important to get this right.”