July 31, 2013

 

Australia's live cattle exports to Southeast Asian countries on the rise

 

 

Australian live cattle exporters are seeking to diversify their customers base in Southeast Asia, with exports to the key growth markets of the Philippines, Vietnam and Malaysia growing by more than 40,000 head in the past 11 months.

 

Australia's latest live export shipping figures show that cattle exports to the Philippines have almost doubled in the past 11 months to 37,071 head, while shipments to Malaysia have more than doubled during the same period to 33,400 head. Shipments to Vietnam have risen from 1,193 head to 9,924 head.

 

At the same time, shipments to Indonesia fell by 25% or 81,000 head from 329,419 cattle during July 11 - May 12, to 247,948 cattle in July 12 -May 13, reflecting reductions in quotas imposed in line with Indonesia's aim to achieve self-sufficiency in beef production.

 

Exporters are reporting increased demand from various Southeast (SE) Asian countries at present. This is partly driven by pricing, given that Indonesia's reduced competitive presence in the market has seen the price of Australian cattle drop and become more attractive to price-sensitive markets.

 

However, demand is also being driven by the fact that SE Asian economies are growing and their own domestic supplies of cattle are depleted and not able to meet rising demand. Consumption in SE Asian countries have overtaken domestic herd numbers, while other sources of supply, such as imports of cheap Indian buffalo meat into countries with laxed foot and mouth disease protocols, are reportedly getting harder to obtain, due to increased competition for the product from Eastern Europe, which in turn is making it more costly.

 

Some exporters believe Vietnam has the potential to become a much larger import customer, as it is moves to expand its own cattle processing sector to produce beef for its own domestic consumption and for export into neighbouring China. Malaysia is also recording strong growth, with demand for cattle and beef rising accordingly.

 

The Philippines was once Australia's largest market for live cattle, taking more than 300,000 head yearly, until currency challenges and decisions by the country to open its doors to cheaper supplies of boxed beef from foot and mouth disease-affected zones saw the live cattle trade whitered over a decade ago. However, consumption in the Philippines has exceed the number of cattle herds, and live cattle imports are again seen as a means of securing the supply required to satisfy demand in the growing economy.

 

Despite the demand that exists throughout the region, the main factor constraining export volumes to date has been the requirement for Australian exporters to bring supply chains in each market up to approved welfare and traceability standards before they can ship cattle to those markets.

 

Under the Exporter Supply Chain Assurance System (ESCAS), exporters must gain certification for the feedlots and abattoirs that will handle their livestock.

 

The system means that if any breaches of welfare are detected, authorities can impose penalties or sanctions upon the individual exporter involved without forcing the closure of an entire market. Such a developement occurred in June 2011 when all exports to Indonesia were banned for a month in response to footage showing Australian cattle being subjected to cruel treatment in Indonesian abattoirs. As a result, penalisation has not only affected the exporters involved but other parties which supplied cattle into facilities and abattoirs in Indonesia.

 

The latest live export figures, current to May 2013, show that Israel currently ranks as Australia's second largest live export market for cattle, taking 54,696 head in the 11 months from July 12 - May 13, 5% more than the previous 2012.

 

A number of Middle Eastern destinations have also recorded significant growth in the same period, including Jordan, where exports rose from 600 head in July 11- May 12 to 9,000 head in July 12-May 13; Libya, which rose from zero to 6,900 head, and Saudi Arabia which increased from zero to 3,550 head.