September 5, 2008

Australian beef shipments are having hiccups not only in its key Asian markets, but also in Russia due to political tensions.

Australian beef producers and exporters are not profiting from the anti-US beef sentiment in South Korea due to high input costs and consumer inability to pay higher prices.

Sales of chilled Australian beef to South Korea increased from last year, but frozen beef sales decreased as importers try to keep stocks low in the hope that the Australian dollar will keep falling, coupled with the uncertainty surrounding US beef and consumer interest, according to Meat and Livestock Australia's (MLA) Korea regional manager, Glen Feist.

However, US beef in South Korea is so far confined to neighbourhood butcher shops as major grocery chains, hypermarkets and restaurants are not prepared to incur the ire of consumers who are concerned about the safety of US beef.

Consumers in Japan, now facing a combination of economy slowdown, food inflation and tightened wallets, have turned to cheaper protein sources such as pork, chicken and cheaper beef cuts like hamburger and minced meat. Still, Australian beef consumption in Japan has increased and MLA expects to ship 355,000 tonnes of beef in 2008, up from the previous forecast of 335,000 tonnes.

On the other side, Australia may face more problems when it comes to Russia, as foreign minister Stephen Smith said Australia is considering whether to continue its sales of uranium to Russia following the conflict in Georgia. This possible move by the government is worrying the Australian beef industry, especially after the Russian ambassador threatened economic consequences for Australia if the uranium deal fails to materialise.

Brad Bellinger, from the Australian Beef Association, said cattle farmers need to keep trading with Russia, which is their fourth largest market and the only one that is showing good growth.