Several Factors Affect Aussie Beef Imports

GLOBAL - In 2011, Brazil witnessed a 14 per cent decline in beef exports, although it was the third largest exporter behind Australia and the US.

1 February 2012

2 minute read

The decline was a result of Brazil's focus on the Middle East, with one-third of the total being delivered to Iran, Egypt, Saudi Arabia and Israel, according to a report prepared by QMS's Iain Macdonald and Stuart Ashworth. Total exports were limited mainly by the combination of reduced domestic production and increased domestic demand. The USDA’s forecast of two per cent recovery in Brazilian production volumes in 2012 is likely to be consumed by the Brazilian population.

Australian beef exporters managed to overcome a number of external shocks during 2011. Among these external factors were the natural disasters in Queensland (floods) and abroad in Japan (earthquake and tsunami), its largest market. Exports were also hampered by the strong Australian Dollar, which reduced competitiveness against US beef in key Asian markets. During 2011, 54 per cent of total volumes went to the US and Japan compared with 81 per cent in 2004.

Looking forward to 2012, Meat & Livestock Australia (MLA) is forecasting a further gain in exports of three per cent. The main assumptions behind this growth are a recovery in demand from the US as its production volumes fall back and beef prices subsequently rise, plus further diversification into the growing markets of the Middle East and South Asia. Production volumes are forecast to be boosted by greater carcase weights; a further consequence of wet weather during 2011 which led to improved grazing conditions.

JBS's decision to close one of it's Argentinian plants was made due to a number of linked factors, beginning with the falling cattle population in Argentina which has left the firm operating with spare capacity whilst having to pay more to source stock. As a result, profitability has suffered and processors have found it difficult to access permits for the lucrative export trade. The resulting uncertainty has led JBS to downsize.

South American trade partners have suspended beef imports from the FMS-affected region in northern Paraguay. With severe questions being asked of the nation’s animal health standards, beef producers in Brazil, Argentina and Uruguay may benefit from a rebalancing of export demand. However, tight supplies in these countries will restrict their ability to fill the gap left in global trade.

Korea is set to re-open its market to Canadian beef from animals under the age of 30 months after its parliament passed new import health requirements. Eventually the market is forecast to be worth around £20m per annum to the Canadian industry.