September 27, 2013

China halts chilled beef imports from Australia

Buoyed by concerns over food safety, China has banned imports of chilled Australian beef, but the measure is being viewed by producers as a non-tariff barrier designed to protect the local industry.

The ban was issued on August 26 and is shaping up as an early test of how the Abbott government handles the sometimes fraught relationship with Australia's biggest trading partner.

Trade Minister Andrew Robb is about to restart talks on a free-trade agreement with China, in which agriculture will be a key negotiating area.

Robb acknowledged China had "queried" the standards of Australian chilled beef and said he was working to resolve the issue.

Suspicions around the validity of Beijing's safety concerns became apparent when Chinese authorities said they may consider allowing imports to restart under a quota system if shortages eventuated. China also allowed into the country any imports that were on route when the ban was issued.

Due to a crackdown on smuggling and a series of food scandals involving local producers, chilled beef shipments to China have surged 873% over the last year. Chilled cuts, which are usually sold to high-end restaurants and five-star hotels, accounted for 18% of Australian beef exports to China in terms of value, over the first seven months of the year. The total trade is expected to reach US$600 million this year, making China the third-biggest export market behind Japan and the US.

One Australian exporter said the ban was about protecting local producers who had been squeezed out of the market by surging imports. Another industry figure in Shanghai said the ban was "totally political" and was due to concerns from the local industry that Australian exports had grown too quickly.

The Australian Financial Review has been told that Chinese authorities are no longer accepting chilled beef, as Australian abattoirs did not have the correct certification. Prior to this, abattoirs were certified for both chilled and frozen beef exports to China.

But this is no longer the case and big meat processors such as JBS and Teys are now facing a lengthy certifications process before exports can resume.

On the basis of this "advice" from the Chinese, Australian quarantine authorities have stopped issuing export certificates for chilled beef.