News

Updated: China suspends four Australian beef plants, amid growing trade tensions

Jon Condon, 12/05/2020

FOUR large Australian export beef abattoirs have been suspended from accessing the China market overnight, as trade tensions with our largest agricultural trade partner escalate.

The four export plants caught up in the trade halt are JBS Australia’s Dinmore facility in southern Queensland – the single largest beef plant in Australia; JBS’s dedicated grainfed Beef City abattoir outside Toowoomba; Northern Cooperative Meat Co’s Casino abattoir in northern NSW; and Kilcoy Global Foods’ Kilcoy abattoir in southern Queensland.

Collectively, they represent a large portion of Australia’s current chilled beef access capacity into China, ensuring the action has had maximum impact.

Most of the suspended plants were also involved in another similar, surprise suspension of six facilities that took place in 2017, which dragged on for months. All three companies involved in the suspensions have trading offices in China. Somewhat surprisingly, Kilcoy Global Foods is owned by Chinese interests.

The reasons for the suspensions remain vague this morning, but were described to Beef Central as alleging ‘inconsistencies in labelling and documentation’ to do with HGP status of the beef involved. The shipments were apparently all made in late 2019.

It remains unclear what the suspension means for meat from the four export plants that is already on the water to China. Some industry stakeholders suggested this morning that further suspensions may follow.

The developments come at a time when China remains desperately short of meat protein in general, as a result of the impacts of African Swine Fever. ASF has decimated the domestic Chinese pig population, leaving a protein deficit estimated by analysts at up to 15-20 million tonnes over the next 3-5 years.

Australian trade sources say China’s decision is entirely politically motivated, and has nothing to do with plant performance, regulatory or documentation issues surrounding HGP status.

The beef plant suspensions follow news published on Grain Central yesterday that China is considering putting an 80 percent tariff on Australian barley, which has halted forward grain trade and redoubled industry and government efforts to dissuade China from making the imposition.

Australia is currently involved in trade tariff disputes with China over imported steel and aluminium.

China and Australia do not always see eye to eye when it comes to issues including human rights, or Chinese activity in the South China Sea.

The precarious relationship between the US as a long-term ally of Australia and China may have some effect on China’s response to historic pricing of Australian barley.

Inflaming this is the US line that China constructed the COVID-19 virus, and growing international support for an independent investigation into the source of the disease in China.

It is important to note that China’s actions overnight are plant suspensions, not de-listings.

China is Australia’s largest volume export market for beef, accounting for close to 300,000 tonnes in 2019, representing about 29pc of Australia’s total beef exports.

Industry, Government responses:

JBS Australia issued the following statement this afternoon:

The Federal Department of Agriculture and Water Resources (DAWR) informed JBS yesterday that two of its beef processing facilities Dinmore and Beef City in Queensland, have been suspended from shipping product to China produced after 12 May 2020.

We understand there are also two other Australian beef processing facilities that have also been suspended by China.

DAWR has informed that the Chinese suspensions relate to a range of technical issues.

JBS Australia is firstly working with DAWR to understand the technical issues that China has raised and secondly, based on understanding the issues, we will be responding through corrective actions with DAWR.

 

The Australian Meat Industry Council issued a statement this morning, saying China was a valued export market for Australian beef.

“We have created strong commercial relationships, linkages and supply chains to supply Chinese consumers with high quality Australian product,” AMIC chief executive Patrick Hutchinson said.

“Australia remains as one of the world’s most reliable exporters throughout the COVID-19 period, faring exceptionally well due to the preparedness measures implemented by establishments,” he said.

“AMIC and its members are well aware that China has strict requirements for technical matters, including labelling, and the Australian meat industry takes these concerns exceptionally seriously. While not desirable, we have dealt with issues of this nature before, and are working closely with the Commonwealth. This is a trade and market access issue that is being led by the Commonwealth.”

Asked about the terms of the suspension and whether it would affect export meat already on the water, Mr Hutchinson said AMIC was seeking clarification, but it ‘looked like’ the suspension would apply only on shipments from 12 May (today).

“That’s the current public interpretation of what’s on the GACC (China’s regulatory for imported products) website,” he said.

AMIC was working hand-in-glove with DFAT (from a trade policy perspective) and the Department of Agriculture (technical perspective) to better understand the issues raised in the suspension.

“These are issues raised on a business-by-business basis, about regulatory verification activity,” he said.

“The Chinese have given these individual companies a very specific list of the issues raised – even down to product code.”

“Ultimately the aim will be to get the suspensions lifted as quickly as possible. We went through a similar circumstance in 2017, and we were able to get that resolved within three months. Obviously we are looking to get this matter resolved more quickly than that, given that there are less plants involved.”

Mr Hutchinson said AMIC was working also with its industry association partners, including AMPC and MLA on the response.

“Since the last similar episode in 2017, AMIC has led the charge on a China trade relationship strategy, working with MLA and AMPC. We have, in fact, made a lot of inroads, with volume reaching 180,000 tonnes in 2018 and 300,000t in 2019. There’s a lot to be said for the work that’s already been done in this space.”

“But at this point nobody has any idea how long this will take to resolve. It could be a week, a month, or a year.”

 

A statement from trade minister Simon Birmingham said the Government was notified yesterday about the suspensions imposed by Chinese authorities relating to labelling and health certificate requirements.

“We are concerned that the suspensions appear to be based on highly technical issues, which in some cases date back more than a year,” the statement said.

“I’ve been speaking with industry leaders, colleagues and departments overnight to formulate a comprehensive response.”

“We will work with industry and authorities in both Australia and China to seek to find a solution that allows these businesses to resume their normal operations as soon as possible.”

 

 

 

 

 

 

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Comments

  1. Anthony Tupper, 31/05/2020

    Sound like a load crap if you’re go to kill 4000 heads cattle a day your going to slow down even have to suspend production for a while I work in the place for 11 years now I’m retired they’re always having to standdown employees take for instance the occasion in 2010 nothing has changed I feel sorry for employees trying to make ends meet it’s a very stressful time not the best industry to work in

  2. Robert Irvine, 17/05/2020

    Why won’t Australia exporters tell us specifically, what are those “highly technical issues’ around labelling and health certification“?

  3. Tony campbell, 13/05/2020

    Don’t forget the USA used its hygiene regulations throughout the 70s to restrict imports of Australian beef so nothing is new

  4. Sherry Dean, 13/05/2020

    Wake up Australia! Nip it in the bud now! China owns so much of our country, our government have given too much leeway, and now they are showing the upper hand, and displaying what they are capable of!

  5. John Gunthorpe, 12/05/2020

    This is all part of international trade. Whenever AMH had an EU audit we knew we would have a licence suspension. The US tried to get an advantage in North Asia trade by imposing minimum residue levels on organochlorine pesticide traces in the kidney fat in the late 1980s. Fortunately we had a tail tag traceback system to turn it around. Every piece of trim meat had to have an establishment number stamped on it to get access to Canada and often trade was stopped when pieces were found without the ink stamp. It is not worth dying in the ditch over this issue. Currently the US are taking every kg of beef we can ship so Dinmore, Beef City, Casino and Kilcoy will have no trouble placing their production. AMIC are correct – follow the science and wait for the importer to accept the outcome that will inevitably arrive.
    Australian Cattle Industry Council

  6. R. Trezise, 12/05/2020

    Is it fair to assume that this China ‘blacklist’ does not include any abattoirs financed by Chinese business or state interests?
    Australian government should recognise this (as it has happened recently with other suppliers) and implement an “Australian ban of all beef exports to China.”
    Alternatively, legislate Chinese ownership of abattoirs is no longer allowed and must be sold immediately.

    Kilcoy Global Foods, one of the four suspended plants, is 100pc Chinese owned. Editor

  7. Stuart Leahy, 12/05/2020

    Obviously China has a lot to hide. Stop sending iron ore Twiggy.

  8. JULIE RAMOS, 12/05/2020

    China is playing games because of the request for independent investigation for the covid 19 Australian meat are the best in the world. We have to be strong and patience we shouldn’t let them nilly Australia. Economy will start slow but gone other countries to export and new countries to import don’t rely on China they are going down of what they did. Companies on China are coming back to their countries US start to open products on import and looking new countries to export their products. We should start manufacturing in Australia and create more jobs for Australians

  9. Mark Downes, 12/05/2020

    Emotions overpowering intelligence

  10. Grant Piper, 12/05/2020

    You don’t start an honest enquiry with ‘march the guilty bastard in’. When will our pollies learn to zip it and not run off at the mouth to curry favour with the US? Last year the US locked us out of 40,000 tonne of high value grainfed EU quota. Trade is a minefield and as minnows we need to be smarter than scoring own-goals.

  11. Michael McMahon, 12/05/2020

    This is a repeating sub standard trading practice carried out by a deceiving totalitarian regime.
    Only trade with countries whom abide by good ethics.
    Let them fill up on bats, cats, dogs and rats!
    It is the Chinese year of the rat.

  12. Ian McKenzie, 12/05/2020

    China is behaving like a run away bulldozer.They are demanding influence on Agricultural Australian produce yet we still allow them to buy major Australian infrastructure (Water ,Dairy farms and Processing Plants Etc) that are crucial to the GDP of this country ,not to mention the financial predicament alot of our farmers are facing. Standing tall in not enough we need strong dialog and meaningful interaction at the highest Government and Business level.

  13. Gary Guan, 12/05/2020

    I dont think its tech problems , its obviously political problems.

  14. Daniel Ong, 12/05/2020

    Of course Harvey Beef is not on the list, is it!!??

  15. John A Codrington, 12/05/2020

    Well I understand they have defaulted on their payments for Darwin Port. Time to repossess the asset and return it to Australian control.

  16. mark, 12/05/2020

    Straight out political blackmail , high time we stop relying on China as a trading partner.

  17. SHIRLEY BASTIAN, 12/05/2020

    Ah well they have done it again – I hope the Aussie government stays strong this time and does not bend… If they choose to let their ego in the way of their people starving just to prove a point
    let them ! time to stand TALL Aussies !!!

    • Peter Vincent, 12/05/2020

      It’s all very well to urge the feds not to bend and all Australians to “stand tall” when it’s Australians’ other than oneself losing money hand-over-fist.
      China resorts to punishing trading partners when their Communist ideology is threatened because it can. Nations pushing back on Chinese influence must be supported by other democracies in terms of trade, sovereignty, defense and intellectual propriety but that appears to be a “bridge too far” for most.
      As the old adage goes….”one needs a lot of money to stand on principle”.

      • Ron McMah, 13/05/2020

        Exactly right Peter, especially NZ, who supplies virtually all their dairy products and a large proportion of their beef, sheep meat and other agricultural products, they will benefit from our loss. Where is our Anzac partner?
        I do not point out NZ alone, the EU, Britain, USA and all countries that have democracy must be united, Australia cannot go it alone as we will be the ones to suffer while the others take our market share. United we stand, divided we will fall!

        • Keith Wilson, 16/05/2020

          To true Ron old mate. Someone has to go first and stand up against trade blackmail but Birmingham may have been wise to spend some time on the phones to our close partners giving a heads up that Australia was going to unleash and expected some visible support whrn the flack flew. Great to see the courage but needs to be tempered with an understanding of the likely consequences for suppliers who have already been through some protracted tough times.

  18. David Slattery, 12/05/2020

    Perhaps MLA should be letting our Chinese consumers know that it is there government causing the problem not Australia.
    We all know how it will be played out in China !!

    • Gil Schmidt, 13/05/2020

      It is difficult to make judgements without knowing the facts like the proposed Barley tariffs. Is it political motivation or trade distortions. I purchased barley ex Brisbane Port in December at $375 per ton and in April at$388 per ton not exactly Dumping prices all ex West Australia.
      In drought there is a distortion between domestic and export values.
      Maybe a 80% tariff on imported electrical goods might even the score.

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