Australian beef exporters optimistic about China demand

Spanish Market: Agriculture
20/02/23

Australian beef exporters could increase sales to China by more than 100,000t this year to reach 2019 levels, if Beijing-Canberra relations continue to improve and trade returns to normal.

Trade tensions have been easing since a meeting between China and Australia's foreign ministers in December 2022, with the first Australian coal shipment in more than two years reaching China on 9 February. This has created cautious optimism in the Australian beef export industry, which is hopeful that sanctions on Australian abattoirs will be removed in the coming year.

Unlike Australian coal, beef sales to China have continued over the past two years. But Beijing imposed bans on some processors in August 2020, contributing to a 33pc decline to 218,624t in 2020 from 328,848t in 2019, according to data from the Australian Bureau of Statistics.

A return to 2019 trade levels would be well timed for Australian producers as cattle availability and easing labour shortages will make it more easy to meet increased demand.

The processing time for Australian products into China has sped up in the past month, according to beef exporters. This reflects the easing of Covid-19 restrictions in China, as well as improved relations between the two countries.

The virus, which began to spread outside China in early 2020, impacted trade and led to major travel and social restrictions, decreasing beef consumption outside households dramatically. There were further reductions in Australian beef sales to China in 2021 and 2022 to 172,646t and 179,029t respectively, largely because of trade restrictions implemented by China.

Over the past decade China has gone from taking just 4pc of Australia's frozen beef exports in 2012 to hitting a peak of 27pc in 2019, when it took over from Japan as the biggest export market for Chinese products.

China's share of Australia's frozen beef exports has slipped each year since 2019 to 18pc in 2022, with Japan retaking the top spot as the biggest importer at 23pc. South Korea, Indonesia, the Philippines and other southeast Asian nations all increased their share of the market last year compared with 2019, as Australian exporters looked for alternative markets to China.

China was a particularly important market for Australian frozen boneless prime cuts in 2019, taking 38pc of all exports or 142,000kg of this grade of beef. This fell to 21pc or 58,000kg in 2021 before rebounding to 29pc or 76,000kg in 2022. The reopening of the Chinese market would add significant potential demand for this segment at a time when Australian supply is set to increase following a major herd rebuild.

Industry body Meat and Livestock Australia forecasts that 2.1mn t of beef will be produced in this year, which will create 1mn t of shipped weight beef for export. China's beef imports have increased noticeably in the past few years in line with rising consumption, Chinese customs data show, and demand could jump further this year with the country reopening from Covid-19 restrictions.

The potential return of Chinese demand for Australian beef and a positive start to Australian slaughter numbers in 2023 could lead to a further rise in beef production in Australia along with demand.

By Jessica Clarke

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