Global beef’s sensational stories . . what does it mean for Australia?

The triple whammy of scandals engulfing Brazil’s beef business, the Indian federal government’s radical move to ban the sale of buffalo and the new trade agreement between the United States and China have made for interesting market watching in recent times.

Analysts and experienced beef industry consultants point to the unprecedented nature of developments.

That makes it very difficult to estimate the true impact of what is unfolding, said Rabobank’s senior analyst animal proteins Angus Gidley-Baird.

However, such is the potential of the considerable market disruption to change global trade flows that Rabobank’s just-released Beef Quarterly focuses on how the unrest might shape things for Australia.

There is a possibility of a shift back to a supply-limited market, it found.

In relation to India’s attempts to impede the trade of its beef in the name of protecting the Hindu sacred cow, Mr Gidley-Baird, the report’s lead author, said never before had there been a scenario where an exporter itself had sought to shut down trade.

Australia’s live cattle bans in 2011 came close but there was always the understanding that  Australia was looking to resolve issues and get the business up-and-running again as soon as possible, he said.

Usually it is importers imposing restrictions.

In the past three to five years, India’s presence in the global beef market had grown significantly and if it were to withdraw from its principal markets of Vietnam, Malaysis and the Philippines, that would remove around 779,000 tonnes, or 2.7 million head in equivalent live cattle, according to Mr Gidley-Baird.

The India news broke in late May and there have little developments since.

South East Asian beef experts, including consultant Dr Ross Ainsworth, believe there is no way India’s buffalo export trade will be eliminated.

But given the size of that trade, any scale back would have a flow-on for Australia’s opportunities, although the other point is that it may push lower-income consumers in Asia towards alternative proteins.

Meanwhile, Brazil’s show of beef industry horrors continues. It started in March with meat inspection corruption scandals which led to temporary import bans, then the JBS affair arrived which is seeing big sell-offs of assets owned by that company - the world’s largest meat packer. The suspension last week of fresh Brazilian beef exports to the US is the latest development.

While Brazilian beef exports are only down 10 per cent year-on-year in the first five months of 2017, Mr Gidley-Baird said all were looking to see if the instability would continue to have a bearing on Brazilian cattle prices, and subsequently, production.

During a visit to Darwin in late March, leading South American economist, Adolfo Fontes, Rabobank’s senior research analyst based in São Paulo, pointed out Brazil’s beef industry bounced back quickly on the regulatory front following the first event.

It could be these type of events, while garnering big media interest, actually don’t affect consumers or governments that need to meet growing demand for beef, for extended periods.

Whether China will become a large market the US now, on the back of those doors opening for the first time in 13 years, is also being closely watched here.

US economists have told Fairfax Media: “Our target in China will be high quality, we’ll play on a very small segment.”

That would be mean aggressive competition for Australia.

Mr Gidley-Baird said China’s strict trade requirements, including traceability of livestock, would limit the number of cattle the US had available to send to this market, however over time that may change.