Australian beef producers attending the Gympie Meat Profit Day were told today, Friday, that dramatic declines in beef exports out of Brazil and the wind-back of subsidised exports from the EU have unearthed a range of new frontiers for Australian markets.
Meat and Livestock Australia’s general manager for international markets, Dr Peter Barnard, provided an outline of the ‘exploding carcase’ in today’s global market, driven by the need to optimise the value of individual cuts.
He said up until the past year or two, Australian beef has historically been reliant on just two or three key export customers.
As late as 2007, 87pc of all Australian exports still went to just three Pacific Rim markets – 40pc to Japan, 31pc to the US and 16pc to South Korea.
“The reason for the concentration is simple – they are the best beef markets in the world – importing more, growing more and paying more than others,” Dr Barnard said.
They paid 20 to 25pc more for similar product than other markets in the world – partly because the EU is prevented from dumping subsidised beef into them, and also because they are fussy about food safety requirements and exclude South American beef on disease-risk grounds.
But that historical picture is now changing, for a number of reasons, Dr Barnard said.
“Back in the 1990s, the EU used to dump a million tonnes a year of subsidised beef into world markets.
"Today, its exports have reduced to a trickle, while its own imports have increased by 50pc.
"That’s a positive for the rest of the world beef markets," he said.
Dr Barnard said another major, more recent factor is what's happening in Brazil.
Ethanol production and farming is driving cattle out of Brazil’s more productive areas, and the country’s rates of slaughter and export have nose-dived.
Slaughter last year, went down by 10pc, and is expected to decline by a further 8pc this year.
Europe and Brazil were the two countries that have been major suppliers to world beef markets, other than the premium Pacific Rim customers serviced by Australia.
At the same time, supply out of Brazil and the EU has been declining, demand from the rest of the world has been increasing, Dr Barnard said.
In the past five years, markets like Russia, the Middle East, North Africa, South America and China have grown even faster than have those on the Pacific Rim.
“That’s led to a very unusual phenomenon – cattle prices and export prices out of Brazil today are on par with those out of Australia," he said.
"That is allowing Australian companies to more ably compete in so called ‘frontier’ markets that have been the traditional domain of subsidised EU beef and product from South America.
"For example, Australia expects to send 70,000 tonnes of beef to Russia this year – making it our fourth largest market.
"Similarly, exports to Indonesia will grow to about 33,000t in 2008.
"The Philippines and China are also major growth markets that did not exist in the past,” Dr Barnard said.
"Probably the most exciting development in all this is that Australia is no longer concentrating on selling fullsets or quarter beef.
“Instead, we are splitting up the carcase and sending more single-cut items into specific destinations, where there is the greatest demand and highest price for each.
"We are scanning the world for opportunities, and as a result, countries like Thailand, the Solomon Islands, Singapore and Brunei are figuring as valuable and significant markets for specific cuts,” he said.
"This optimisation of carcase value means that outside Australia’s ‘big three’ customers, product will increasingly be scattered to an incredibly wide range of markets, worldwide.
"At the same time, there are still valuable opportunities in some of Australia’s ‘mature’ markets.
"The population in the US increases by 20 million people every decade – effectively a new beef market the size of Australia every 10 years."
Dr Barnard also outlined some of Australia’s red-meat marketing strategies in export markets, which are tending to focus more on the emerging markets and new opportunities in existing ones.
New offices have opened in the past four years in Beijing and Moscow, and increased funds are being directed into segments such as the booming chilled beef trade into the US, which has grown dramatically since 1999.
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