June 6, 2013

 

 

Posting more than 100,000 tonnes for May and smashing a seven-year old record, Australian beef exports have hit an all-time high.

 

Figures released by the Department of Agriculture, Fisheries and Forestry (DAFF) show 103,207 tonnes (shipped weight) of beef and veal was sent overseas last month, eclipsing the previous record of 94,693 tonnes that was exported in November 2006.

 

The latest volumes sent overseas are up 19% on the same time last year. The most staggering growth is in China, which took 11,486 tonnes in May, putting the country on track for 100,000 tonnes of Australian beef by the end of this year.

 

That outcome would position China as our third biggest customer behind Japan and the US, and possibly ahead of Korea for the first time in decades. Exporters are almost dizzy from the frenzied uptake of Australian red meat products in China, which last May had only bought 709 tonnes for the month.

 

Lamb is also being swept up in the China surge. Last month saw an all-time record set for Australian lamb globally of 19,964 tonnes (swt), surpassing the 18,725 tonnes shipped in November last year. The biggest driver of the lamb buy-up is the Middle East, which took 6,000 tonnes, up 37% on-year and China, which took 4,217 tonnes, up 36% on its May order in 2012.

 

The Middle East is also proving it has a liking for Australian beef. Last month it took 6168 tonnes, its highest monthly total ever, with half the consignment bound for Saudi Arabia.

 

The first five months of 2013 has seen 25,292 tonnes shipped to the Middle East, a 122% increase on the corresponding period last year. This week's figures also show the rapid change that has taken place in the global marketplace for Australian beef. Seven years ago, when the last record was achieved, 11 % of Australia's beef exports were shipped to countries other than the US, Japan and Korea.

 

In 2013, countries outside the traditional "big three" are now taking a 30% slice of the overall export pie. Additional growth is also being seen in the Philippines and Malaysia. Korea, which has been tough going for exporters, is rallying, registering 12,423 tonnes in May, up 36% on May 2012 and achieved despite aggressive competition from the US assisted by the favourable trade differential it receives through the Korea-US free trade agreement.

 

Meat and Livestock Australia managing director Scott Hansen said the record was good news for Australian producers, despite subdued cattle prices, poor seasons and a strong Australian dollar that would "no doubt" take some of the gloss off the news.

 

"There is good reason for Australian beef producers to be optimistic, but there are two continuing, confounding factors that are eroding the benefits to producers before they arrive at the farm gate," Hansen said.

 

"The first is the fact the dollar remains strong. It is below parity at the moment but it is still a strong currency and continues to erode prices paid in Australian dollars. Secondly, the big one for this year is the record kill numbers. The oversupply in the marketplace has had that depressing effect on prices, which is also related to seasonal conditions."

 

Hansen said the investment of producers' levy funds in emerging markets was beginning to pay dividends. "For the last couple of years, industry has been optimistic about the growth in the incomes of people in emerging markets. There is a direct link that increased incomes leads to increased demand for beef," he said. "What we're seeing in these figures is the realisation of this potential in emerging markets.

 

"Back in 1998 producer levies funded a Meat and Livestock Australia office in Shanghai and then in 2001 those same levies funded a representative office for Australian beef and lamb in Beijing at a time when we were doing 1,500 tonnes a year.

 

"This is the advantage the industry has through its socialised levy funds, is the years of relationships that have been built in China with importers, government officials and end users who are now coming to the fore in helping us to assist exporters to turn this growing economy into increased sales for beef. "Evidence tells us that China is going to continue to be a significant market for the Australian beef industry."

 

Hansen said 85% of the China volumes were frozen grass-fed product, with secondary cuts and prime grilling items across most categories also selling strongly.