Japan Turns it's Back on Aussie Beef

AUSTRALIA - Demand for Australian beef from the Japanese market weakened in 2007, as total exports declined to 377,864 tonnes, 7% below the record set in 2006. The fall was largely due to the high A$, competition from US and buyers’ unwilling to cover the rising cost of producing grainfed beef.
calendar icon 8 January 2008
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Chilled beef shipments to Japan declined significantly, going back below 200,000 tonnes for the first time in four years. Grainfed volumes fell 10% from last year, to 171,451 tonnes – 45% of total exports. Frozen grassfed was the only sector that saw a slight growth, owing to lively sales in the Japanese fast food sector and a shift in buying towards lower price cuts.

Beef exporters to Japan experienced difficult trading conditions in 2007. On average, the A$ appreciated 11% against the US$ in 2007, and 13% against the Japanese yen on the previous year. Also, substantial rises in grain prices – 49% in wheat, and 53% in sorghum – increased the cost of grainfed beef production. Japanese buyers, however, were reluctant to pay for the adjustment in costs, as the country’s flat economy had already sent consumers’ interest towards cheaper proteins such as pork and chicken, reducing overall demand for beef.

In addition, the re-emergence of competition from US beef caused significant price decreases for certain Australian cuts.

With the under 21 months age restriction still in place, volumes from the US were still limited in 2007 (approximately 11% of the 2003 level). However, US supply is expected to increase substantially if the current import protocols are eased, with a decision expected around mid this year.

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