April 4, 2022
Dismal Q1 for Australian beef exports
Australia's beef exports have recorded a disastrous start to the year, with first quarter (January to March) shipments falling to a record low.
Total shipments to all export markets for Q1 reached just 177, 223 tonnes – the lowest in at least the last decade, and 27% below the past ten-year average of 241,000 tonnes.
As Beef Central has reported earlier, it's been a bad start for the Australian red meat processing industry in 2022, caused principally by:
- Flooding and logistics issues across large areas of Eastern Australia surrounding record rain during late February and early March;
- Associated congestion problems with the Port of Brisbane – the nation's major gateway for beef exports – shut for a week, and continuing to operate on a reduced scale through March. Some processors were forced to reduce throughput as chilled and frozen storage started to fill-up as container vessel services were delayed;
- Impacts from flooding and logistics on road and rail delivery of packaging materials, pallets and other consumables used in the plants themselves;
- Underlying shipping container access issues and port service difficulties in the United States and some other importing destinations;
- An upswell in COVID-19-related sickness among processing staff in January also saw production off to a very slow start in the 2022 season.
Underlining all these issues, slaughter cattle supply remains very tight across most of Australia, as the herd recovery process continues to evolve, after the devastating 2019 drought. Indeed some regions did not start to emerge from drought until the second half of 2020.
Monthly export figures released by DAF show March beef exports to all markets reached just 74,348 tonnes, about 9000 tonnes or 11% below the same month last year.
Most large markets were impacted with the exception of Japan, which took 20,083 tonnes of Australian beef for the month – virtually the same as last year.
Calendar year-to-date trade with Japan has reached 46,529 tonnes, down 8% on the same three months last year.
With the start of Japan's new financial year from April 1, Australia's tariff rate for chilled beef into the country this year is 27%, continuing the long-term decline from 38.5% that applied prior to the Japan-Australia Free Trade Agreement in 2015. The JAEPA tariff will continue to decline gradually to 23.5% in 2028. March trade is often compromised into Japan as traders anticipate the friendlier tariff that applies after the annual adjustment.
Flat levels of trade with other customers saw China elevated to second largest export beef customer again in March, accounting for 13,483 tonnes, mostly frozen. That was up about 15% on February statistics, but back 10% on March last year.
First-quarter volume reached 33794 tonnes, down 7% on last year.
South Korea last month imported 13,187 tonnes of Australian beef – a sharp 28% rise from February, but down 16% on last year. First quarter volume reached 33,039 tonnes, down 8%.
The United States continues to absorb historically low levels of Australian beef, as it liquidates large numbers of its own breeding cows used for manufacturing beef due to drought.
Trade into all East and west coast US ports last month reached a little over 11,000t, down 12% year-on-year. The January-March quarter saw volume reach just 26,925 tonnes, down 9% on last year.
Australia's smaller and secondary export markets also struggled last month and through the first quarter.
Indonesia took 3,105 tonnes last month and 6,518 tonnes for the quarter – back 36% and 45%, respectively.
The 11 destinations making up the Middle East took 2,641 tonnes last month, down 6%, while quarterly trade reached 5,419 tonnes, down 32%. Price remains a key issue in the Middle East, where cheaper South American beef is establishing a strong market presence.
The EU and UK markets remain in a holding pattern, until free trade agreements are ratified (in the case of the United Kingdom) or negotiated (in the case of the European Union).
Trade to the UK last month reached just 73 tonnes, and the EU at 398 tonnes, about two-thirds of trade seen a year earlier.
For the quarter ended March 31, the UK took just 203 tonnes of Australian beef, and the EU, 1,662 tonnes, back about 20pc on corresponding 2021 figures.
- Beef Central