OPPORTUNITIES exist to harmonise some of the benefits in the new China live export sheep and lamb rules with the slaughter cattle protocol, industry consultant Cameron Hall told the 2017 LIVEXchange conference in Perth yesterday.
Mr Hall also said there were also indications that the release of import permits for feeder cattle into China is “quite close”.
Mr Hall is an Australian Livestock Exporters Council director and an independent consult with Food and Agribusiness Services Group. He has been involved in China protocol discussions since 2006, and with the first slaughter cattle shipments by sea and by air to the country via Elders earlier this year. He has visited China about 65 times since 2003.
Live cattle exporters have been working to ensure initial live slaughter cattle shipments to China proceed without incident to facilitate the issuing of feeder cattle permits, which would improve overall trade viability and protection from Australian market price volatility.
Harmonising sheep and cattle protocols
Mr Hall said the recently announced China live slaughter sheep import rules are “just a bit more commercially sensible,” than the cattle protocols.
“Originally the cattle protocol required exporters to only be preparing one lot of cattle in a facility at a time if that was going to China.
“What the sheep protocol says is effectively you can prepare a range of lots of sheep for different markets at the same time, so long as the sheep being prepared under quarantine for the feeder and slaughter market in China are segregated from the other animals.”
This made sense for the efficient use of infrastructure and staff, Mr Hall said.
Despite two sea shipments of slaughter cattle leaving for China from Portland in recent weeks, Mr Hall said the trade was not as busy as it would like to be, so it hasn’t “pushed” the issue of preparing multiple lots in facilities.
But he said discussions around harmonising the sheep and cattle protocols would be starting.
“The industry, certainly Livecorp and the Australian Livestock Exporters’ Council’s view, is that that should be attainable – the discussion has to be had. But what it shows is that there has been some thinking done after the first few shipments of feeder and slaughter cattle, how it might work more efficiently from a sheep point of view, and I think that will be able to applied for cattle as well,” he said.
“The changes (required) aren’t protocol changes; they are in the annexe of additional requirements and they can be much more easily changed.
“Particularly now I’m talking about the removal of the all-in, all-out approach which says you can only have one shipment of livestock in a pre-export facility at a time, no other livestock for other countries and once you take them out we want it spelled for a period of time.
“That now says that you can have multiple shipments in a registered premise as long as the Chinese sheep are segregated and separated from other animals,” he said.
“That creates a significant benefit in terms of efficient use of facilities.”
Talk in China on feeder cattle permits
On the prospect of China releasing import permits for feeder cattle, Mr Hall said there was nothing official to report.
“But there is a lot of talk coming out of China from commercial parties that they believe that is quite close,” he said.
“How long that is going to be, we don’t quite know, but there is a fair bit of chatter that that’s pretty imminent.”
Mr Hall said 2016 MLA data showed Chinese consumers packaged beef buying priorities included naturalness, freshness, origin, brand and date of production.
“So I think one of the things that imported live cattle can do, particularly where they are processed in high-quality Chinese facilities with a strong focus on food safety integrity, is deliver those key attributes of natural production, freshness, provenance, brand and date packaged.”
Lack of clear market signals holding back trade
Since the protocol was signed in 2015, less than 5000 slaughter cattle have been shipped to China, including the two shipments currently on the water, he said.
Mr Hall said the pricing of cattle, shipment and protocol costs, “the commerciality of the protocol” and a lack of clear market signals on what breed, segmentation and quality relationship was wanted, had probably held the trade back.
“The reality is Chinese buyers want the highest quality for the cheapest price, and that’s never going to any different, but we need to get that relative to product that is looking to be produced and what consumers want.”
Mr Hall said improvements in the Chinese domestic cattle price was auguring well for the trade, and probably explained why there had been more recent activity – but he had a key message about the trade’s need for attention to detail.
“If your business is not good at detail and your suppliers of livestock aren’t committed to getting things right, then China just might not be the market for you,” he warned.
“It is important to get the detail right and it is important to comply with the requirements.”
Investment in abattoirs, feedlots and logistics
Mr Hall said there had been significant abattoir, feedlot and shipping investment in China in preparation for the trade “to really start to move.”
“The Chinese requirements require that animals essentially go through a closed loop process, with loading from one discharge port into one supply chain.”
Mr Hall said whether exporters thought the Chinese requirements were necessary “really doesn’t matter.”
“The expectation is that we comply with the regulations, and that we comply with them every single time; we have to meet what’s expected. Exceeding it once won’t advance you up the ladder, but consistent compliance over time, without fuss, will build your reputation as a reliable supplier into that marketplace.”
He said as soon as an animal started to head towards the China feeder and slaughter supply chain, Australian exporters needed to ensure that they were feeding and managing for efficient production all the way through.
“There is not enough time in the supply chain if we’ve got 14 days after slaughter cattle arrive, to get those animals back on track. Nor is there enough time if you are putting feeder animals into the market where you’ve probably got on average 60-75 days of feeding – if they don’t go into that marketplace and get onto the ration straight away or there is an issue and they go off their feed for 7-10 days, there is no chance of picking up that lost production.”
Significant potential, but work to do
Mr Hall said the Chinese market has significant potential for live export, with further industry investment and positioning occurring.
“But there is still some way to go, commercially, operationally and from a regulatory point of view.”
He said there would need to be greater linkages created throughout the supply chain, clear customer channels, targeted product and segmentation into regional markets.
“There does need to be further refinement to reduce costs in the protocols and the additional requirements, without impacting biosecurity.”
“Things around slaughter periods after arrival, the registered premise’s distance from port, foot bathing and multiple consignees will eventually add more efficiencies and more profitability through the process,” he said.
- Sheep Central editor Terry Sim is in Perth covering LIVEXchange for the ‘Centrals.’