August 24, 2006

 

Australia's beef producers receive little aid in a difficult market

 

 

Australia's beef producers are receiving little in government aid in a market where Australian beef exports are hampered by various restrictions, according to a new report released by the Australian Bureau of Agricultural and Resource Economics (ABARE).

 

In the report, ABARE outlines the restrictions on access to Australia¡¯s three main beef export markets ¨C Japan, the US and South Korea.

 

While high tariffs stand in the way of exports to Japan and South Korea, quotas restrict volumes to the US.

 

However, the recent Australia¨CUS Free Trade Agreement would result in US restrictions being phased out over the long term.

 

While the EU is a potential market for higher value beef, the market remains tightly controlled by quotas.

 

ABARE also noted that the Australian beef industry also receives little aid from its government. 

 

Subsidies to Australian farmers amount to just 3 percent of their gross incomes in 2004, compared to 60 percent in the EU, 25 percent in Canada, and 31 percent in Japan, according to estimates from the Organisation for Economic Co-operation and Development.

 

The amount is measured as the monetary value of transfers from consumers and taxpayers to support beef meat producers through policy measures

 

According to ABARE, global beef production is growing faster than demand, thus making it more crucial for the industry to achieve productivity gains to maintain international competitiveness.

 

Since 1977-78, producers have increased productivity by 1.6 percent a year on average

 

However, growth has been uneven, with the largest third of beef farms achieving strong productivity growth, while the remainder showed little or no improvement.

 

ABARE also noted differences in beef production between north and south Australia. Production in northern Australia is based on native pastures on large properties, while production in southern Australia is based more on smaller properties with more effort on improved pasture quality.

 

ABARE also notes that Australian consumers have acquired a taste for grainfed beef, as more demand for such beef are coming from supermarkets.

 

However, chicken meat is catching up with beef due to product innovation and declining prices.