Global wrap with Michael Finucan – MLA General Manager, International Markets
28 August 2018
Earlier this month, Australian sheepmeat producers and industry stakeholders came together in Perth for LambEx 2018. The gathering of so many producers and key industry representatives provided an opportunity for Meat & Livestock Australia’s (MLA) international team to present the latest global insights and market opportunities as part of MLA’s Global Market Forum – Sheepmeat. Attendees at the forum heard how the Australian Sheepmeat industry continues to perform well in global markets, with a positive outlook and growing worldwide demand for lamb and sheepmeat, supported by some robust international economies, growing populations and rising demand for high quality proteins.
2017-18 export values show strong international demand
The 2017-18 fiscal year value of sheepmeat exports, released this month, demonstrates the strength of international markets, reaching a record A$3.3 billion (up 23.9% on 2016/17). Sheepmeat exports to the US totaled $750 million, up 4%, supported by ongoing demand for lamb in foodservice outlets. The value of sheepmeat exports to China were another highlight, increasing 88% year-on-year to $563 million. As with beef, rising disposable incomes in the region are driving demand for high quality imported lamb and mutton, with domestic production currently unable to satisfy appetites.
Australian beef exports for 2017-18 totaled A$7.9 billion (up 11.9%) – the third highest fiscal year on record (ABS). The value of Australian beef exports bounced back during 2017-18, as increased production supported a greater availability of product for export. Global competition for protein, particularly premium beef, in key Asian markets helped drive the overall value of beef exports higher.
Exports to Japan surpassed A$2 billion, a lift of 11% on last year, driven by sustained demand for high quality beef. Exports to Korea, US and China all exceeded A$1 billion. Exports to the US benefited from an increase in supply availability compared to last year, increasing 14%. Robust demand in China, supported by ongoing expansion of middle-income earners, has resulted in significant growth for Australia exports, in both volume and value terms, up 34% respectively.
US trade tensions escalate
While Australian exports have been strong, the industry continues to closely monitor ongoing tensions between the US and China, following the introduction of retaliatory tariffs and a fresh round implemented by China last week. Last week, hearings commenced in the US on further action proposed against China by the United States Trade Representative (USTR) of additional tariffs on trade to the value of around US$200 billion.
Tariffs have had a direct impact on US pork exports and there have been reports of stock build up in US cold stores. With US exports of pork and pork offals to China and Hong Kong accounting for nearly 500,000 tonnes swt, worth US$1.08 billion, last year product out of the US will need to find a new home. While the trade ‘tit-for-tat’ is yet to affect Australian red meat exports, significant ripples through the pork industry could affect demand for Australian product into the US. Moreover, the global pork market is poised following the discovery of African Swine Fever in China – the world’s largest producer and consumer of pork. The ability of the government to control the disease – now reported in north and south China – quickly will be critical to its impact on production and import requirements.
Despite ongoing and escalating tensions, MLA with the Australian red meat industry remain focussed on continuing to grow demand internationally and improve market access for our product. In late July, Australian Meat Industry Council (AMIC) and MLA appeared at the Senate references inquiry into the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), where the benefits to the red meat industry were outlined. The next step is for the Australian Parliament to ratify the agreement so that the benefits of improved access into Japan, Canada and Mexico can be realised. This was aided by the recent release of the Joint Standing Committee on Treaties report into TPP-11 (to which the red meat industry made a submission) which indicated support for ratification.
Welcome progress is also being made on the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) – with negotiations nearing completion. Industry priorities for IA-CEPA include tariff elimination for those products entering Indonesia (several beef, sheepmeat and offal lines) that were not already addressed via the ASEAN-Australia-New Zealand FTA (2010); and the establishment of a more market orientated import regime for both boxed red meat and live cattle exports.
Email Michael Finucan
MLA General Manager, International Markets
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