Market access key amid global challenges
08 August 2017
Off the back of a roller-coaster 2016/17 for global beef markets, the outlook remains challenging, with a number of factors set to continue to impact Australian red meat exports.
While the Australian cattle herd has been in a rebuilding phase for most of the year, export volumes dropped below 1 million tonnes to 963,000 tonnes – down 17% on 2015/16. This comes at a time when our competitors have ample product for global markets and have been regaining access and pushing strongly into key markets. This, combined with the Australian dollar hovering around the 80c mark and cattle supply remaining tight, will see the road to the end of the year remain full of challenges.
Despite the challenging environment, Australian beef remains very well positioned in key north Asia markets, with the Japan and Korea markets continuing to underpin Australian exports.
In both markets favourable market access attained through respective free trade agreements have positioned Australian red meat into a position of strength – allowing Australian beef in particular to ride through the challenging global environment.
The strength of these two key markets helps to reinforce the importance of the Australian red meat industry continuing to push for greater market access advantages across the globe. For MLA, market access in existing and emerging markets continues to be a priority. Working with the broader Australian red meat industry, and the Australian Government, there are a number of activities underway to strengthen our position in key markets.
MLA has recently bolstered our Trade and Market Access Team, enabling us to increase our work including coordinating research into reducing market access barriers and developing industry position papers for government.
Some priorities for the red meat industry, and therefore MLA, include:
- Australia-European Union FTA
- Brexit / UK FTA
- Trans-Pacific Partnership
- Australia-Indonesia Closer Economic Partnership Agreement
- FTA with Pacific Alliance (Mexico, Colombia, Peru and Chile) following the Australian Government recently embarking on negotiations
The Japan market
In Japan, our largest export market, export volumes remained stable in 2016/17 (Up 4% to 279,000t) despite tough competition from the US. Overall imports have grown strongly with frozen beef imports hitting safeguard volumes in July. This will see tariffs on frozen beef from ‘non-EPA’ nations (eg. US, NZ, Canada) ‘snapback’ to 50% until 1 April 2018. Due to Australia’s free trade arrangement we will not be affected by this, however how the impacts on the flow of product to other markets is yet to be seen. The tariff hike will hit the price sensitive beef bowl (gyudon) chains the hardest. They will look to run down their stock levels and consider more pork menu items with some potential for Australian beef.
The Korean market
The Korean market has been a stand out over the past few years and despite a slowdown in volumes in the last six months it remains Australia’s 3rd largest market and a key market for Australian beef. The US continue to push hard back into this market, however Australian beef is still very popular with Korean families and Australia retains a dominant position in most retailers. The recent US atypical BSE case was big news in Korea and continues to demonstrate the sensitivities the Korean consumer has to food safety.
Trade and Market Access
Andrew McCallum, MLA Global Manager – Trade and Market Access
Japan & Korea market
Andrew Cox, MLA International Business Manager – Japan & Korea
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