Global beef markets: Watch for US millennials and short plate to Japan

So too a good understanding of consumers far and wide and up-to-the-minute knowledge of emerging trends.

These were key messages to emerge from international market talk at industry forums held in conjunction with Meat and Livestock Australia’s annual general meeting in Alice Springs last week.

Millennials in the United States, the growing number of affluent households in China and dynamics in Japan are a few things Australian beef should be keeping a close eye on.

Demand for imported beef in Japan is experiencing a boom at the moment, driven partly by lower local production but also an increasing desire for leaner beef for health reasons and a sustained growth in demand for steak, according to MLA analysts.

While cheaper US beef has increased its market share in 2017, imports from Australia have also increased by 8 per cent and are being assisted by lower tariffs under the Japan-Australia Economic Partnership Agreement (JAEPA).

Free trade agreements can be complex but are the backbone of how Australian beef accesses markets, MLA’s general manager international markets Michael Finucan said.

“We have to continue to reduce tariffs to ensure we are competitive,” he said.

Australia’s well-established trade protocols and advantageous market access conditions into Japan over other beef suppliers provide a competitive advantage and strong foundation for future growth in this key market, according to MLA.

The continuation of sustained economic growth in Japan is expected to assist in driving beef consumption longer term.

Frozen Australian beef will be assisted with a considerable tariff advantage in Japan leading up to the end of March next year.

However, so far, the tariff differential has yet to slow US beef imports down and MLA’s experts in Japan report there are a number of reasons to be cautious.

The most popular cut of frozen beef imported to Japan from the US is short plate – accounting for approximately 70pc of total volume into Japan.

The US has large supplies of this cut prepared in a specification the Japanese trade desires. For large foodservice customers, switching to an Australian supply is not simple.

As well, the US frozen beef tariff was already higher - 38.5pc above that faced by Australian beef - yet US market share has increased in 2017 due to availability and price factors, including the high Australian dollar, that are still present.

Japanese customers also have some other options available, such as increasing the amount of pork they use, and running down stocks of frozen beef.

China is a big, diversified market which presents incredible opportunities as the numbers of households exceeding the “beef affordability”income threshold of US$35,000 lifts, Mr Finucan said.

It is also a market that poses significant access challenges.

On the topic of this year’s temporary ban of six Australian plants supplying China, Mr Finucan said: “The suspensions had a major effect on the plants in Australia and the customers buying from those plants who were left short on product but the wider industry in China was largely unaware.

“The consumer in China also would not have known anything about it.”

While the US, fuelled by ramped up production, was pushing hard into Australia’s global markets, it had a long way to go in China because it does not have the systems to meet Hormone Growth Promotant-free and traceability requirements, Mr Finucan said.

“It will take them a number of years to build up the volume for China but they’re coming,” he said.

The US economy was travelling well and people were “out eating beef again”, Mr Finucan reported.

Chilled grassfed product was showing solid growth in particular.

Australian exports in this space were growing each year and currently sitting around 50 to 60,000 tonnes a year.

Major food service chains were now putting grassfed on their menus.

“It’s driven by millennials and the story around healthy, better for the environment and animal welfare,” Mr Finucan said.

“It’s certainly a sector we expect will continue to grow amongst those looking for a differentiated product.”

A challenge, however, was the inability to get product-of-origin labelling, he said.

Meanwhile, US exports to all key markets have increased in the past financial year, with the overall value now at US$5.6 billion freight-on-board – their second largest fiscal year on record.

This large US supply, coupled with tighter Australian supplies, has allowed the US to increase supply into Japan and Korea with a notable rise in shipments to Taiwan, Vietnam and Indonesia, according to MLA.