New players lead global trade in 2012

James Nason, 27/07/2012

Which nation will be the world’s biggest beef importer by volume in 2012, based on current forecasts?

And which nation will be the world’s biggest exporter by value in 2012?

If your answers included the United States, Brazil, Japan, or Australia, you may be in for a shock.

Mick Keogh from the Australian Farm Institute posed both questions to a forum of leading beef industry stakeholders at Westpac’s headquarters in Sydney yesterday, to highlight changes that have occurred in the global beef market this year.

The answers caught many by surprise.

With demand in traditional import markets under pressure from weak economic conditions, Russia is on track to overtake Japan and the US as the world’s largest beef importer in 2012.

On a supply front, a huge rise in beef and buffalo meat sales into lower-end Asian markets is set to propel India into the position of world’s largest exporter by volume in 2012, ahead of Australia, Brazil and the US.

The changing of the guard highlights the constantly shifting nature of the global beef landscape and the challenges which Australia’s export dependent beef industry faces to remain competitive on a continual basis.

In a relatively positive assessment for Australian beef prices, Mr Keogh the overall outlook for the Australian beef industry looks strong, particularly thanks to the strength of projected demand growth in Asia.

However, the short term outlook was coming under a range of pressures including the impact of global economic uncertainty on consumer demand, increasing competition from lower-priced chicken and pigmeat products and the undermining effect of a high dollar on the competitiveness of Australian beef in key export markets.

Pressure was also coming from high labour costs. 

Mr Keogh also asked members of yesterday’s gathering if they could nominate where Australia ranked in terms of average wage costs compared to other countries.

The answer was fourth, and, significantly, well above the costs of labour in competing supply countries such as New Zealand, the US, Brazil, Argentina, and India.

In relative terms Australian wage costs have jumped from 83pc of US wage costs in 1997 to 117pc of US wage costs in 2010. The costs of processing and packing meat in Australia were now almost twice the cost of the US.

“It is a stark reminder that there is a lot of pressure coming onto our export beef industry at the moment in terms of wages and more general costs,” Mr Keogh said.

With Australia’s herd at historically high numbers, Mr Keogh said an “amber warning signal” for the market surrounded the potential for extra production to flow onto the domestic market this spring and summer if forecasts of drier seasonal trends come to fruition.

Despite the clear short-term concerns, Mr Keogh said the tight global supply picture should partly offset the impact of weak demand in key markets.

“While the outlook in demand terms is subdued, certainly in the short term, the potential for a number of the main producers to suddenly grow production and grow exports is limited, so that is leading to reasonably positive projections for the market not too far down the track,” Mr Keogh said.


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