HAMPERED by reduced national cattle herd size after years of drought, Australia’s beef exports to all markets fell dramatically to 1,039,410 tonnes last calendar year, trade statistics released this morning by the Department of Agriculture show.
Volume was back almost 190,000 tonnes or 15.4 percent on the preceding 2019 year, as better seasonal conditions in some cattle regions – particularly in southern states – prompted herd rebuilding and reduced female kill. Declining beef price competitiveness in some export markets, and fewer calves born as a result of continental-scale drought in 2018-19 also contributed to the result.
Export volume last year was the lowest seen since the 2016 and 2017 years, when herd rebuilding was in full swing after earlier drought events.
While Australia’s export beef trade has been highly volatile over the last decade because of the drought liquidation/herd rebuilding cycle, last year’s total volume of 1.03 million tonnes is well below the industry’s five-year average for exports of 1.08mt.
Year of two halves
2020 was a year of two halves for beef production and exports, with first-half volumes January-June back just 3pc on the previous year, before falling dramatically during the second half because of outright slaughter cattle shortage, and the commence of herd rebuilding in some areas following drought-breaking rain.
In it’s mid-year industry projections issued last July, MLA forecast that drought’s shadow would see 2021 beef exports reach only 1.029mt – an insignificant rise of just 6000t over its forecast for the 2020 year (remember the year was still only half completed at the time of the projection was issued) of 1.023mt.
Given average seasonal conditions for the year ahead, MLA forecast 2022 exports to rise to 1.1mt, before recovering further to 1.2mt in 2023.
At its recent high-point for exports in 2019 during the depths of the drought liquidation, Australian beef exports hit almost 1.23mt.
All markets impacted
All major export markets were impacted to some extent by last year’s lower production – some worse than others – while political, market protection and other trade issues also exerted an influence.
Japan biggest market
As a result of the big slide in export business into China last year, Japan is again Australia’s single largest export customer by volume, taking 269,302t of Australian chilled and frozen beef for the 2020 year – about 18,000t or 6pc below the previous year. About 43pc of this was in chilled form.
As discussed in this earlier report, beef exports to the United States fell away badly during the second half of the 2020 year, as Australian grinding beef became less price-competitive in the US imported beef market. For example, in November, monthly volumes reached less than 9600t – the lowest monthly shipment volume seen to the US since January 2011.
Total exports to the US last calendar year reached 211,754t – a dramatic 40,000t or 16pc decline on the previous year, and one of the lowest trade levels seen in the past 30 years. Low cow slaughter volumes in Australia, especially during the second half of the year during the commencement of herd rebuilding, contributed to much lower grinding beef exports, on which Australia’s trade with the US is based. Record high Australian slaughter cow prices during the year did not help competitiveness.
In comparison with another very low beef export volume back in 2017, when Australia’s exports to all markets reached over 1.01mt, volumes to the US reached a little over 234,000t. Compare this with the 2015 year when Australia was in heavy drought reduction phase (thus high female slaughter) when exports to the US hit a record high of close to 416,000t. The US beef industry that year was itself in post-drought herd rebuilding, greatly reducing domestic production.
Looking specifically at trade during the month of December, exports to the US were 15,214t, down 47pc compared with the same month a year earlier, and 40pc lower than the December average for the past five years.
Biggest mover in terms of 2020 export volume was China, which slipped from being Australia’s largest volume market in 2019 (300,000t) to third largest last year (196,696t). That’s a decline of 35pc in a single year, continuing the history of dramatic volatility seen in Australia’s beef trade with China over the past decade.
Growing trade and diplomatic tensions between Australia and China have left a sense of unease across the export trade, but the fact is that volume is now only a little less than two-thirds of what it was a year earlier, suggesting much of the adjustment and trade impact may have already occurred.
To put last year’s China trade in better context in terms of trade reliance, China now represents 18.9pc of Australia’s overall beef exports, down from almost 25pc the year before.
China continues to source larger volumes of South and Central American beef to fill its requirements, often at prices below what Australia can offer. As a result some South American countries now push 50-70pc of their entire beef export volume into China.
South Korea continues to shine as one of Australia’s most consistent and reliable export markets – despite the triggering of the country’s Safeguard tariff on Australian beef late last year.
Total volume to Korea last year was 160,850t, down only 1.5pc from the year before.
In total, the ‘big four’ export markets last year (Japan, US, China, Korea) accounted for 80pc of Australia’s beef and veal exports, down from 81.5pc a year earlier.
Among smaller markets, the declining export volume trend driven by lower beef production was also apparent.
Indonesia took 47,733t of mostly frozen Australian beef last year, down about 17pc on the year before (57,637t). Beef offal exports, however, grew significantly, hitting 34,587t, ranking Indonesia as Australia’s single largest offal market by volume, well ahead of South Korea and Japan.
Taiwan, another steady market for quality Australian beef, last year accounted for 24,625t, down 12pc to 28,241t the year before.
Beef exports to the Middle East region reached 29,332t, down another 6pc on the year before, while trade to the European Union reached its lowest point in more than a decade, at 8525t, down from 14,000t a year earlier.