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China beef reality check highlights challenges ahead for the dining boom

- Monday, June 27, 2016

The latest beef import data for China shows that both Brazil and Uruguay have now moved ahead of Australia as exporters of beef to China. This is a statistic that highlights the smug complacency that some  Australian farmers and policymakers had about the 'inevitability' of Australia securing a major share of booming Asian food imports needs to be urgently cast aside, and some more serious thought given to how Australian agriculture can maximise the benefits available from the Asian food boom, given limited production capacity.

The most recent data on Chinese beef imports highlights that Australia has slipped to third place, behind both Brazil and Uruguay. Uruguay has been competitive for some time (as the following graph to the end of 2015 identifies), but Brazil has rapidly emerged as a major supplier over the past year, and now supplies more than 30% of Chinese beef imports.

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This graph is as much a reflection of the limits on Australian production capacity, as it is an indicator of the emerging ability of South American nations to meet the quality and biosecurity standards required by the emerging Chinese middle classes. The fact that a number of Brazilian beef processors have been able to gain approval to export beef to China highlights that Australia's previous competitive advantage as a supplier of 'safe', disease-free beef is not something that will be sufficient in the future to ensure that Australian beef exports remain competitive in these markets. These numbers are also a reflection of the fact that South American beef producers have a much lower cost of production and are therefore very cost competitive, especially at present when a shortage of supply has pushed Australian beef prices to record highs.

This should be a timely reminder to all in the industry that, despite the cost and the paperwork associated with systems such as the National Livestock Identification Scheme and National Vendor Declarations, these constitute a very important part of the marketing package for Australian beef - which is at a premium price in comparison with major competitors. 

This is also a message that extends much more widely to the full range of Australian agricultural exports to Asia. In the absence of very focused attention to safety and quality at both a national and brand level, South American and Eastern European agricultural exporters will be the main beneficiaries of the Asian dining boom.


 
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