All red meat exports are not equal, say market experts

All red meat exports are not equal, say market experts


Beef News
CASE STUDY: MLA’s global manager of industry insights and strategy Natalie Isaac speaking about the   opportunities for Australian beef in China at Red Meat 2018.

CASE STUDY: MLA’s global manager of industry insights and strategy Natalie Isaac speaking about the opportunities for Australian beef in China at Red Meat 2018.

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Red Meat 2018 hears global market opportunities outweigh challenges.

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GLOBAL red meat market opportunities outweigh the challenges but all exports are not equal so Australia’s moves will need to be strategic.

For beef, it will be all about the premium end of the market and for sheepmeat, it will be about maintaining the momentum.

This is how Meat and Livestock Australia’s team of international market experts see the short and medium term unravelling.

In a comprehensive global markets forum held as part of the big industry event Red Meat 2018, producers were told future prosperity would depend on access to free and open markets, promoting Australia’s points of difference and meeting changing consumer needs better and faster than an increasingly-long list of competitors.

MLA’s global manager of industry insights and strategy Natalie Isaac explained consumption was forecast to grow but there were headwinds.

For the past 30 years global consumption of both beef and sheepmeat has been increasing - beef had grown 20 per cent and sheepmeat 50pc.

Most institutions were projecting 1 to 3pc growth over the next  5 to 7 years, Ms Isaac reported.

Population growth and urbanisation are the big drivers.

“For beef, consumption is relatively stable in our more traditional markets like the United States, with the rapid growth occurring in regions like Asia and the Middle East,” Ms Isaac said.

Australia’s share of export markets has also been changing.

Twenty years ago, Australia’s top two markets, Japan and the US, represented around 80pc of exports but today they represent just 50pc.

For sheepmeat, markets like US, where it is a niche protein, have doubled.

Ms Isaac said Australia was a relatively small producer on the global beef stage, representing only 3pc of total production but had a big impact in export markets, holding around 14pc of the trade.

“Our key competitors, the US, Brazil and India, have increased production since 2017 and that is forecast to continue,” she said. 

“The gap between the lowest and highest average global price per kilo of these three countries and Australia - so the top four suppliers - eight years ago was around $2 a kilogram.

“Today it is $5. What that says is all exports are not equal, so we need to focus on staying at top of that gap.”

ALSO AT RED MEAT: Norton controversial to the end.

The China example

China was an example of a particularly wide range in beef prices, Ms Isaac said.

“The bulk of the volume here is underpinned by low-price beef but there is a growing segment of consumers who appreciate quality and who are willing to pay for it,” she said.

“Via research, we have identified 15 cities within China which have high beef spenders and as such are most attractive for short to medium term growth for our beef.

“They spend over $95 a month on beef. They are more likely to eat meat every day and to be looking for premium beef and more likely to buy Australian beef.”

This is where marketing efforts are being focussed in China.

Same clean, green story

MLA’s general manager of international markets, Singapore-based Michael Finucan, said given 70pc of Australia’s red meat was exported, overseas markets were critical to the success of industry.

OVERVIEW: MLA’s general manager of international markets, Singapore-based Michael Finucan.

OVERVIEW: MLA’s general manager of international markets, Singapore-based Michael Finucan.

“Our domestic market is our largest individual market and is worth about $10b, while exports  are worth around $12b for boxed meat,” he said.

“In the beef sector in particular, there are some very hot competitive challenges at the moment.”

Indian buffalo beef had recently entered a key live export market, Indonesia, and was setting a global floor in prices - and was continuing to gain access to new markets, Mr Finucan reported.

“Alongside that, South American players have gained access to China and become significant competitors and some, such as Uruguay and Argentina, are using a clean, green story as well,” he said.

“US production has increased and they are also having a red hot crack at pushing back into some of our key markets, like Japan and Korea.”

Meanwhile, global trade wars and market access were presenting challenges.

“When our plants are suspended in markets like China it has a big ripple effect across all of our business because that product needs to go elsewhere,” Mr Finucan said.

“Then there is plant and laboratory protein to monitor.”

However, Mr Finucan believes there are more opportunities than challenges.

QUESTION TIME: Robert Hermann, from market analysts Mecardo, asking questions of MLA's global business managers at Red Meat 2018.

QUESTION TIME: Robert Hermann, from market analysts Mecardo, asking questions of MLA's global business managers at Red Meat 2018.

Global economies are robust - the US in particular is consuming a lot of meat, both theirs and ours - and the growing middle income earners in South East Asia will create enormous lifts in people able and wanting to consume Australian red meat.

INFO GATHERING: Producers took the opportunity to pepper MLA's global market experts with questions on everything from fake meat to supply constraints at Red Meat 2018.

INFO GATHERING: Producers took the opportunity to pepper MLA's global market experts with questions on everything from fake meat to supply constraints at Red Meat 2018.

In China alone, there will be a doubling from now until 2022 in the number of consumers who fit that demographic.

“And while there are challenges on market access, there are also good news stories - the Trans Pacific Partnership coming into force next month is one, and hopefully an Indonesian free trade agreement will be completed soon,” Mr Finucan said.

“We are seeing a softening of the trade rhetoric in China and the hope is that improves our access, and we are also optimistic about the Brexit and the European Union potential.”

MLA’s strategy was to segment markets to provide the best opportunities to help guide investment, the international business managers said.

“Market knowledge and insights is the key to everything. We must develop a deep understanding of the consumer,” Mr Finucan said.

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