THE suspensions this week of four large beef export plants from supplying the Chinese market will derail the track Australia was on to sell $3.5 billion worth of beef to the world's biggest meat importer in 2020.
Regardless of how long the suspensions last, the four plants involved are extremely influential when it comes to grainfed exports, says market analyst Simon Quilty.
Speaking at a webinar run by the Northern Tablelands and North Coast Local Land Services last night, Mr Quilty said confusion was the best way to describe the status for the four meat plants right now.
Two JBS Australia plants - Dinmore and Beef City - plus Kilcoy Global Food's plant and the Northern Co-operative Meat Company in Casino were suspended from sending shipments to China from Tuesday on technical grounds.
China moved into top spot as Australian beef's largest customer last year when we shipped 300,000 metric tonnes there.
Mr Quilty, managing director of MLX and Global Agritrends Down Under, estimated the four plants involved in the suspension would have made up close to 30 per cent of those shipments.
Of the 75,400 MT of grainfed beef exported, they likely accounted for half.
"The chilled beef market is critical in developing Australia's overseas markets and our exporters are looking to expand it every day of the week," Mr Quilty said.
"It's where the opportunity is in driving value. This is the great tragedy of this week's suspensions. "
While shipments already on the water appear to be safe, it is still very unclear whether the suspensions would be short or long term.
The best case scenario, Mr Quilty said, was that the issues were resolved in seven days.
However, the development appears to be shrouded in uncertainty.
"Within China itself, one department will tell you something different to another," Mr Quilty said.
"Looking at 2017 as a precedent - six plants were banned for six months and the reason was labeling, which appears to also be the case here," he said.
Three of the six plants involved in that event are affected by this week's suspensions.
Meat & Livestock Australia's managing director Jason Strong, in a message released today, said Australia had developed strong commercial relationships, linkages and supply chains to supply Chinese consumers with high quality Australian red meat product.
2019 exports to China of boxed beef were worth $2.67 billion.
"Demand in China for Australian beef spiked dramatically in 2019, driven in large part by African Swine Fever and the domestic protein shortage this created. This saw China rise from fourth to the top export destination for Australian beef," Mr Strong said.
"However, it is important for context to note that Australia exports to over a hundred countries, with no one single market representing more than 25pc of red meat exports. This large spread and diversification of export markets continues to be a strength of Australia's red meat industry."