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

It has been a tough seasonal start to 2019, with many of our producers dealing with the ongoing effects of drought and the devastation of the recent floods in North Queensland, leading to many global customers watching Australia’s red meat markets closely. These extreme weather events have generated extensive and widespread media coverage, especially in our global markets, and has left many of our international customers seeking reassurance that Australia will continue to have supply of quality product for their businesses.

MLA, through our network of international offices, has continued to reinforce to our customers and stakeholders that the Australian red meat industry is large and diverse, with production of quality product spread across the entire country. While recent extreme events are devastating to those producers and businesses affected, Australia still has a consistent supply of red meat to meet the strong demand of our international customers.

The effects of this can be seen in recent production and export figures:

• First quarter beef exports totalled almost 265,000 tonnes shipped weight (swt), an increase of 11% on the 2018 levels and underpinned by elevated grassfed cattle slaughter and a weakened Australian dollar. Shipments to the US and China led export growth through the first quarter.
• First quarter lamb exports rose to just over 73,000 tonnes swt, an increase of 12% year-on-year. The US drove increased demand through the first quarter, typical for this time of year when late season lambs are becoming too heavy for some markets. The US remains Australia’s largest lamb market, recording a 29% year-on-year increase to 18,000 tonnes swt over the last three months.

First quarter export trends are discussed in more detail in this article.

However, as the year starts to unfold, the challenges from last year remain. These include:

• For beef, increased production from the US and Brazil and the re-emergence of Argentina onto the global market will continue to place competitive pressure in key export markets.
• Potential economic disruption due to ongoing negotiations between US and China failing to deescalate trade war tensions, which, if unresolved, could hurt the global economy and impact demand for Australian red meat exports.

The Brexit process continues to make international headlines, as the British Parliament continues to deliberate on a path forward. However, the ultimate outcome of the Brexit process and therefore the impact it will have on the Australian red meat trade remains unclear at this point. Last week the EU agreed to give the UK until 31 October 2019 to ratify a withdrawal agreement. This extension means that a number of scenarios are still in play, such as a ‘No Deal’ Brexit or approval of Theresa May’s withdrawal agreement.  There is also potential for the UK to exit the EU earlier, should the UK and EU ratify the withdrawal agreement prior to before 31 October, in which case the UK would exit the EU on the first day of the following month which could raise further complications. MLA continues to monitor this space closely and is working with industry, via the EU Taskforce, and the Australian Government to plan for various outcomes.

Finally, Jason Strong has commenced his role as MLA’s new Managing Director. Jason has extensive red meat and livestock sector experience, knowledge and connections – from the farm through to the end consumer – in both domestic and international markets. Most recently, Jason was Chief Executive Officer of Smithfield Cattle Company, a leading family owned feedlot and cattle supply business, and prior to this he was Managing Director of AA Co. Jason has also previously represented Australia’s red meat industry as MLA’s Regional Manager in Europe and Russia, as well as making a significant and early contribution to the development of the Meat Standards Australia (MSA) program.

MLA’s International Markets team welcomes Jason and looks forward to working with him as we continue to grow demand for Australian red meat globally.