Strange trade decisions by the US, and friction between China and Washington’s Trump administration may benefit Australian beef export prospects, but cattle producers have been warned not to get too comfortable.
Donald Trump’s decision to quit the big Trans Pacific Partnership treaty represents a big opportunity for Australia to white ant US beef exporters’ strength in Japan and Korea.
“But don’t think the US cattle industry will settle for Australia getting a lower tariff advantage on beef sales when they’re missing out,” said ANZ’s agribusiness research director, Michael Whitehead.
He told a forum at Beef Australia in Rockhampton the powerful US cattle industry would not accept America being in a “losing position” in valuable markets such as Japan.
US beef was also at risk of further tariffs problems in China despite only re-entering that market last June.
Having less US beef, which is priced and marketed similarly to Australian beef in China, may create a windfall for our producers
- Mark Bennett, ANZ
About 32 per cent of Australian beef already sells to countries involved in the TPP deal, signed in March, with Japan taking a big portion of those sales.
The new TPP deal is likely to be particularly advantageous for Australian beef going to Japan.
Tariffs on our frozen and chilled beef will drop from between 27 per cent and 30pc to just 9pc in the next 15 years.
Mr Whitehead said Australia was also already enjoying a rise in farm export trade with Japan – because of tariff cuts associated with the recent free trade agreement with the Japanese.
He said US President Donald Trump’s decision to pull out of the TPP because he could not see significant direct advantages to America was now being re-examined in Washington, particularly in the wake of cattle industry pressure.
Mr Trump has flagged rejoining the 11-country trade forum, if the US gets a “substantially better deal” than was offered to Barack Obama in earlier discussions.
Donald Trump’s `art of the deal’ is all about bluff and bluster
- Michael Whitehead, ANZ
Mr Whitehead said similarly, suggestions of reduced ag export activity between the US, Mexico and Canada were unlikely to amount to much, even though the North American Free Trade Agreement seemed unstable because of Mr Trump’s intervention.
“Donald Trump’s `art of the deal’ is all about bluff and bluster,” Mr Whitehead said.
“He’s making a lot of noise about shutting out Mexico and Canada, but it’s not really going to happen.”
High stakes report
Meanwhile, ANZ’s latest agriculture insight report, High Steaks, launched at Beef Australia, has explored fallout from China’s tariffs on US agricultural products including pork, fresh fruit, wine and nuts.
While Australian beef producers have benefited from growing demand in Asia – mainly Japan, South Korea and China – competition for our exports from the US, Brazil and Uruguay has ramped up lately.
Changes to US tariffs may erode that competition.
ANZ’s agribusiness head, Mark Bennett, said shifting regulatory and trade arrangements generally created uncertainty, but there were potential gains for our beef exporters amid trade volatility.
“Australia’s market share has dropped in recent years due to increased in Australian beef prices,” he said.
“Having less US beef, which is priced and marketed similarly to Australian beef in China, may create a windfall for our producers.”
Significant exporter
ANZ’s report also highlighted the global significance of Australia’s beef industry, which now represents around 15 per cent of global beef exports.
This is despite Australian cattle producers having just 3.5pc of the global beef herd.
“There’s no doubt the world’s markets are increasingly turning to Australia to satisfy the mounting need for quality protein,” Mr Bennett said.
Risky reliance on Qld
However, a risk to the industry’s ability to meet demand was its dependency on Queensland, which currently accounts for 54 per cent of Australia’s beef exports.
NSW and Victoria contribute 18 per cent and 15 per cent respectively.
A run of poor Queensland seasons since 2011 had caused destocking and a declining national cattle herd until 2016.
“With large market concentration in one state, changes to Queensland’s herd, weather and export orders are often felt across the nation,” Mr Bennett said.
“Building the sector and herd numbers in other states, should be a major consideration for both industry and government.”
Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
