May 3, 2006

Australian beef exports seen strong despite increased competition
 

Australian beef export earnings are likely to rise this year with cattle prices remaining at record levels, despite strong competition from the US and South America as factors constraining exporters in these countries were resolved, according to Rabobank.

Beef exports, which account for two-thirds of Australian beef production, rose 1 percent to AU$4.6 billion, or 914,000 tonnes, last year.

Australia had almost exclusive access to the Pacific Basin's highest-value markets, particularly Japan and South Korea, according to senior Rabobank analyst Bill Cordingley.

Australian beef dominates the South Korean market, taking up 72 percent of all imports last year, up from 56 percent in 2004. It has almost 90 percent of the Japanese beef import market, after outbreaks of

mad cow disease  blocked shipments from the US and Canada in 2003.

Cordingley pointed out that a single non-compliant shipment from the US in January this year had caused Japan to re-impose indefinitely its trade ban on US beef, undoing two years of talks aimed at resuming exports.

South America on the hand, had been hindered by the return of foot and mouth disease in areas of Brazil, Cordingley said. The Argentinian government's decision to suspend beef exports for 180 days in a bid to reduce domestic prices had also undermined the international market's confidence.

While Australia benefits in the short term, conditions would tighten next year, with US beef production expected to grow and the country looking to return to the Japanese market. The impact of a growing US domestic production and the return of one million Canadian cattle will also impact on US beef prices.

As such, Cordingley said, "making productivity gains, quality improvements and remaining disease-free" are "essential priorities" for the Australian beef industry.