Global wrap with Michael Finucan – MLA General Manager, International Markets

Opportunities for Australian red meat appear limitless. However, free and open markets, meeting consumer needs and promoting our main points of difference are all vital to our industry’s future prosperity, says Michael Finucan MLA’s General Manager, International Markets.

Impact of drought conditions

The impact of drought conditions across many parts of Australia has forced many producers to turn-off stock, leading to year-on-year lifts in production in 2018, but not necessarily as elevated when compared to longer term averages. On a national level, year-to-July:

• Adult cattle slaughter is up 10% year-on-year, but 6% below the five year average
• Lamb slaughter is up 9% year-on-year and 8% above the five year average, but has contracted sharply in recent weeks with the delayed onset of new season lambs
• Sheep slaughter is up 27% year-on-year and 2% above the five year average

Looking at the export market, strong global demand for Australian sheepmeat, combined with the softer Australian dollar and constrained domestic supplies out of New Zealand, have supported record export volumes and values.  Lamb exports between January and August increased 12%, to a record 183,000 tonnes shipped weight (swt), while mutton shipments surged 25%, to 105,000 tonnes swt. 

As the drought continues (and subsequent media coverage) has intensified, there has been plenty of interest form international customers on the impacts of the drought conditions on supply and associated exports. MLA’s Sheep Industry Projections, released this week, are significant in reassuring our global customers of the ongoing capabilities of the Australian sheep industry. 

Korea beef safeguard

Last month we reported on the strong performance of the Korean market and looming likelihood of safeguard being triggered.  Australia is now at over 95% utilisation and safeguard will likely be triggered in the coming weeks.  Imports of Australian beef incur a 26.6% within-safeguard tariff, which increases to 40% once triggered. 

In comparison, imports from the US incur a 21.3% within-safeguard tariff (they signed their FTA and received tariff reductions two years earlier) – which means the tariff differential will expand from 5.3% to 18.7% for the rest of the year once Australia triggers safeguard - placing additional competitive pressure in the market.

State of the Industry Report 2018

The Australian red meat and livestock industry State of the Industry Report 2018 was launched last week by Red Meat Advisory Council (RMAC) at a special event at Parliament House, Canberra.

The report, compiled by MLA on behalf of the red meat industry, is an informative reference document on Australia’s red meat and livestock industry, including consumption, production, exports, as well as the economic significance of the industry.

Included in the key findings of the report, was a look at the significance of Australia’s red meat exports.  Although Australia accounts for a small proportion of global beef and sheepmeat production, 3% and 7% respectively, Australia is one of the largest red meat exporters. In recent years, Australia has grown and diversified its exports, shifting from a heavy reliance on a handful of key destinations to a more varied customer base.  Red meat and livestock exports (including co-products) totalled approximately $13.3 billion in 2016–17 and accounted for approximately 5.6% of Australia’s key industry exports.

Here we took a closer look at some of the key findings in the report.

Sustainable Food Futures Forum

In Singapore this month MLA held a sustainable futures food forum to identify higher value red meat meal options and to identify new partners to research and innovate in this space. Over 100 local food company and innovators to discuss key themes such as snacking, personalised nutrition and ageing. To find out more click here to read the article.

Global Market Forum at Red Meat 2018

Finally, while the opportunities for Australian red meat appear endless, it won’t just happen. Free and open markets, meeting consumer needs and promoting our main points of difference are all vital to our industry’s future prosperity. This is a key theme of MLA’s Global Markets Forum being held as part of Red Meat 2018. Click here to check out the full line up and register now.

More information

Email Michael Finucan
MLA General Manager, International Markets