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

28 October 2019

African Swine Fever (ASF)

The number one topic of discussion in global meat circles over the past couple of months has been the ongoing spread and impact of African Swine Fever (ASF) across China, and into other key pork markets such as Korea and the Philippines. China’s pig herd has been devastated by the ASF epidemic, with outbreaks occurring in all provinces across mainland China. Accounting for half the world’s pork production (over 50 million tonnes prior to 2019), the scale of this issue is colossal. Vietnam, Cambodia, Laos, Myanmar, Mongolia and, more recently, South Korea and the Philippines have all reported ASF outbreaks and have begun combative measures. Recent MLA analysis covered this spread and the implications.

Pork accounts for almost two-thirds of meat consumption in China and due to scale, even small changes in China’s pork consumption and production can have a profound impact on global trade and prices.  Estimates for the 2019 pork production range from 20-40% decline (or 10-20 million tonne cwe). This represents a significant shortfall, and there is not be enough surplus meat traded on the global market to fill the gap.   For Australian red meat exports, it is unlikely we will see the average Chinese consumer switch from cheap pork to a more premium and expensive Australian beef or lamb product.  While substitution from pork to Australian red meat may be limited, ASF will lift all meat markets to varying degrees (i.e. it will have a knock-on effect from the commodity market upwards). Australia’s red meat fortunes in China have been, and will continue to be, largely dictated by the growth in affluent consumer segments, not ASF, however, it has contributed to accelerated demand so far this year. Australia’s elevated drought induced supply has benefited from the surging demand from China, with beef export volumes for the year-to-September up 73% on 2018 and sheepmeat export volumes for the year-to-September up 37% on 2018.

Launch of State of the Industry Report 2019

This month we have seen the Red Meat Advisory Council (RMAC) launch the Australian red meat and livestock industry State of the Industry Report 2019. The report, compiled by Meat & Livestock Australia (MLA) on behalf of the red meat industry, provides a single and comprehensive overview of Australia’s red meat and livestock industry, including figures on production, consumption, exports, and the economic significance of the industry.  The report confirmed Australia is the world’s largest sheepmeat and goatmeat exporter, and third largest beef exporter behind Brazil and India.  Australia exported 65% of beef, 73% of sheepmeat and 90% of goatmeat production in 2018, valued at more than $13.5 billion. This makes Australia the world’s largest red meat exporter by value.  Australia is also a major player in the livestock export trade, exporting 1.1 million cattle and 1.2 million sheep, worth a combined $1.5 billion in 2018. The report highlighted that while Australia is a relatively small producer of red meat, it plays a big role in global export markets. To read more detail, click here.

Korean beef safeguard triggered

Australia has triggered the 2019 beef safeguard to Korea – with the imported beef tariff increasing from 24% to 30% until 31 December 2019.  The beef import safeguard is a mechanism that allows Korea to increase tariffs temporarily once imports exceed an agreed level under the Korea-Australia Free Trade Agreement (KAFTA). The safeguard volume for 2019 is 170,673 tonnes swt and increases by 2% each year. Strong demand in Korea for Australian beef has led to the annual safeguard volume being fully utilised since KAFTA entered into force in 2014.

Impending changes to AANZFTA and TAFTA

The Department of Foreign Affairs and Trade (DFAT) has recently advised that from 1 January 2020 tariff rates will decrease to zero on a number of Australian beef and dairy products imported into Thailand under the Thailand-Australia Free Trade Agreement (TAFTA) and the ASEAN-Australia-New Zealand FTA (AANZFTA).

Under TAFTA, a special agricultural safeguard provision will remain in place for some beef and dairy products until the end of 2020. This safeguard limits the quantity that can be imported under the TAFTA preferential tariff rate (zero rate).

However, under AANZFTA, from 1 January 2020 the same beef and dairy products will have a zero tariff rate and no quotas. This makes AANZFTA a more favourable option for exporters and importers of products with TAFTA special safeguards still in place in 2020.

To utilise AANZFTA, exporters need to register in advance with their local certifying authority, if they have not done so already, and follow the AANZFTA COO procedures. Freight forwarders and importers will also need to follow the process for clearing goods under AANZFTA.

For more information, please contact Emily Hall at Austrade: Emily.hall@austrade.gov.au or visit https://www.austrade.gov.au/Australian/Export/Export-markets/Countries/Thailand/Industries/food

Andrew Cox appointed MLA General Manager – International Markets

MLA has recently announced the appointment of Andrew Cox to the position of General Manager – International Markets.  Andrew will officially begin in January 2020, after I finish in the role at the end of the year.

Working closely with MLA’s central Marketing and Insights team, Andrew will lead the business unit responsible for the implementation of our global marketing and market access strategies across international markets, in order to grow demand for Australian beef, lamb and goat meat.

In this role, Andrew will also focus on strengthening connections and collaboration between the international in-market teams and all other MLA business units.

Andrew has had a long career with MLA, starting in 2006 as a market research executive. Over a six-year period, he gained experience across international market analysis and consumer research before becoming Group Marketing Manager Consumer Programs in 2012. Andrew moved to Tokyo in 2014 to manage MLA’s Japan office, taking on additional responsibility for Korea in 2016.

With his extensive knowledge of the industry and international markets combined with a strong background in marketing and consumer insights, Andrew is well placed to lead MLA’s international markets team. I would like to congratulate Andrew on his appointment and wish him well in the role.