May 29, 2006

 

Australian cattle company upbeat on Japanese beef market

 

 

Recapturing market share could be tough going for US beef exporters after Japan lifts its import ban, Nick Burton Taylor, chairman of Australian Agricultural Company, said Friday (May 26) in outlining a number of influences on the industry.

 

While the timing of the lifting of the ban by Japan has not been settled, he said it will be in the next several months.

 

Then, US exporters "will find the going pretty tough, bearing in mind the 20-month (cattle) age restriction placed on them," Taylor said.

 

Moreover, Australian processors and brand managers have used the past 2 1/2 years well to establish the credentials of Australian beef in areas that were previously the domain of US grain fed product, he said.

 

The combination of strong relationships forged by marketing concern Meat and Livestock Australia Ltd and Australian suppliers "augers well for maintaining a very significant proportion of this important and premium market," he told the company's annual shareholder meeting.

 

Japan, South Korea and many other importing nations banned US beef in Dec 2003 after the discovery of a case of bovine spongiform encephalopathy, or mad cow disease.

 

Japan and South Korea turned to Australia to help fill the gap left by the US, pushing the total value of Australian beef exports to almost A$5 billion a year, of which Japan accounts for more than 40 percent.

 

After Brazil, Australia is the world's biggest beef exporter, with two-thirds of local production exported.

 

Australian Agricultural Company is the nation's biggest beef cattle producer. Including a A$97 million land and cattle purchase announced to shareholders, the company's properties now cover 8 million hectares on which more than 560,000 beasts roam. The company also operates two feedlots.

 

Burton Taylor also said any spread of bird flu through the region could have a "potentially tectonic influence" on the beef industry, he said.

 

Anecdotal reports indicate a decline in chicken consumption when a threat of bird flu emerges in a population, he said.

 

If bird flu spreads, the traditional pressures imposed by the poultry sector on beef cattle production might be reversed, he said.

 

The rapid growth in consumption of chicken meat in the past three decades is believed to have undermined demand for beef.

 

Burton Taylor also said that while exports from Latin American producers will eventually make inroads into Australia's premium markets, this won't happen in the next 12 months.

 

A combination of genetics, competition for farm land to grow soybeans and an ever-challenging environment for disease control in South America, particularly for foot-and-mouth disease, are limitations in the short term to the emergence of these countries into Australia's higher margin markets, he said.