November 18, 2019

Australian farmers could benefit from tight protein supply as a result of ASF, report says

Global meat production will continue to fall as African swine fever decimates the world's protein market, meaning Australian farmers could fetch even heftier prices for animals they've held onto during the drought.

The latest outlook from agri-focused lender Rabobank said Australia stands to benefit from limited global protein supplies over the next year, as the contagious viral swine fever strain leaves a gap in pork production "that cannot be met".

The Global Animal Protein Outlook 2020 stated that China's pork production losses will exceed the growth in all other regions combined, pulling down overall meat market growth, further stoking uncertainty around trade disputes, and weighing on the rise of alternative meats such as beef and poultry.

African swine fever kills about 80% of the pigs it infects and has already spread throughout Southeast Asia and some European countries.

It has not occurred in Australia.

Rabobank senior animal proteins analyst Angus Gidley-Baird said this meant global demand will not only keep local beef and sheepmeat prices strong, but set them up to spike even further if it eventually rains.

Australia's sheep and cattle herds are at 20-year lows after many farmers offloaded stock to avoid the cost of keeping them alive during the ongoing drought.

Gidley-Baird says while seasonal conditions remain dry, prices are less likely to experience any large downside, as there is "simply not the volume of stock in the market to drive any big crash in prices".

He said while strong beef and sheepmeat prices have been a "godsend" during the drought, the inability for many producers to fully capitalise on the higher prices has been frustrating.

"In this environment of really strong global demand, we have seen, for example, US beef import prices hit record levels at over $8/kg for lean trimmings, but there is simply not the product to send over to take advantage of these high prices," Gidley-Baird said.

- Australian Associated Press