A WESTERN Australian live export company has gone into voluntary administration, after a Chinese cattle importer sought to sharply downgrade price on a consignment of dairy and breeding cattle.

Carpenter International Pty Ltd had agreed to sell a consignment of Holstein dairy heifers to Chinese importer, Be Green Import Export Co, but Beef Central understands Beijing-based Be Green sought to renegotiate the original contracted price from about US$3000 each to about US$2100. Some Angus heifers were also included in the consignment.

Beef Central understands Carpenter paid about A$1850 for the dairy heifers, around 220kg in weight.

Carpenter International went into voluntary administration on Tuesday. Appointed to manage the business’s affairs was WA accountancy firm, Grant Thornton.

Large livestock companies are understood to be among the creditors. A meeting of creditors will be held in Melbourne on April 7.

Carpenter International has operated in the live export industry for the past two years. It is owned by Carpenter Beef Pty Ltd, which is ultimately owned by Mowbray Ltd, a company registered in Malaysia. Carpenter International operates independently from WA’s Carpenter Beef processing and meat export business, which trades into China and other countries.

About 6000 Carpenter live export cattle that were destined for the shipment are currently being held in a Victorian quarantine facility/feedlot called Gerang Gerung in the Wimmera.

It is understood that awareness about Carpenter’s financial difficulties emerged when the company could not pay for the cattle, and the shipping vessel was cancelled after payment was withheld.

Difficulties started to emerge in Australia’s China dairy heifer trade about October or November last year, when importers displayed a reluctance to put up letters of credit. The market has since gone ‘very quiet,’ live export trade sources said.

“It’s virtually pulled up,” a source said. “There’s a couple of shipments in quarantine now, one of which is Carpenters, and the other a small shipment from Austrex.”

Carpenter Beef general manager John Berkefeld said he could not comment on Carpenter International, saying that Carpenter Beef was a different entity and was unaffected by the subsidiary going into administration.

Is beef likely to be affected?

While there has been considerable slowdown in beef trade into China this year, due to some consumer push-back on prices for beef generally, there have been no reports yet of importers reneging on price.

“But the number of one-time trades we’ve done into China in the past year has been unbelievable,” meat trader Stuart Hanna, from Sanger Australia told Beef Central this morning.

“There are typically novices to the beef import export industry. They’ll come in, pay a deposit, we sell them some meat, and they’ll pay the balance before shipment, and we never hear from them again,” Mr Hanna said.

“Yes there are problems here and there. Somebody might pay too much for a load of meat, paying their deposit and then not paying the balance, meaning it has to be flogged off somewhere else. But I’ve not heard of any wholesale reneging on price from Chinese customers,” he said.

As much as Australian meat being consigned through the front door to China carried an expensive duty, domestic meat prices in China, themselves, were ‘enormous.’

“Yes, there’s been push-back from some Chinese consumers on overall red meat prices, but it would not necessarily because Australian meat is any more expensive than any other available supplies,” Mr Hanna said.

Back in 2007 at the start of the GFC, there was widespread reneging on contracts on Australian beef going into Russia and the former Soviet States, which sent some Australian traders broke.

While Australia is trading no beef into Russia at present due to Russia’s own bans based on retaliatory measures over its invasion of the Ukraine, reports are circulating in the world meat market at present of Russian importers again reneging on meat shipments.

“That’s because of the big decline in the value of oil, and the rapid deterioration in value of the rouble,” Stuart Hanna said.

“Under those circumstances, it’s perhaps a small mercy that Australia is not trading any beef into Russia at present,” he said.

A Department of Agriculture spokesman has provided Beef Central with the following comment, following an inquiry:

• A consignment of breeder cattle is currently in pre-export quarantine at an approved registered premises in preparation for export to China.
• Pre-export quarantine is a requirement of the destination market; the department is not aware of any reason to prevent the return of these cattle to the Australian herd.
• The department’s role is to ensure market requirements have been met before export.  That process is currently underway.
• There are no concerns about the ongoing management and welfare of these animals at the registered premises.