Reflections on 2020
18 December 2020
MLA Managing Director Jason Strong, and General Manager - International Markets, Andrew Cox, reflect on the remarkable year that has transpired in 2020 with MLA International Business Manager, Josh Anderson.
Josh: Jason, what have been some of the highlights this year for you?
Jason: It certainly has been a challenging year, but the underlying macro drivers in the industry are some of the massive highlights and opportunities that we still have.
Off the back of two of the most challenging years from an environmental point of view for agriculture in Australia, we’ve got a significantly lower herd and flock. However, the demand globally for protein, even with all the disruption, is still at levels we haven’t seen for a long time or maybe ever.
To see the response of our customers and consumers and support for red meat products was really positive. It’s driven by demand and support for our product, but it also shows the ability of the industry to respond to challenges and that was a fantastic thing to see this year. It really validated so much of what the industry has been supporting and investing in.
I don’t think people gave enough credit to our supply chains and the participants in our industry and firstly, their relationship with consumers and our consumers’ commitment to our product, but also their ability to respond to a crisis. Our industry should be incredibly proud of how it has responded and incredibly proud of the relationship we’ve got with our consumers and customers.
Josh: Andrew, what’s been a highlight for you in terms of Australian red meat in our international markets?
Andrew: I think it’s about the challenges that industry has had this year, even putting aside COVID-19, which is a global issue. The political and trade relationships, particularly with China and the risk that that has carried to exports of beef and even sheepmeat.
Our industry is really well known for its resilience and it has carried us through multiple crises over the decades so obviously we will get through to the other side and end the year in not a bad space.
We’re on target to export over one million tonnes of beef, which these days might seem unexceptional, but historically is an extremely high amount of exports.
On the point of trade risk, one thing in our favour is the diversification we have in our industry. For instance, with China, we export 18% of our beef to China and 25% of our sheepmeat, which means that we’re not reliant specifically on that one market and we are able to diversify into the other great markets that we have. Other commodities such as wool, wine, cotton, and barley, are much more exposed to China - all of those industries send over half of their production to China.
Looking at our competitors, for example New Zealand, they send more than half of their lamb to China. Looking at beef, most of our competitors have a large exposure to their own domestic market and then when it comes to exports, none of them have the same diversity of export markets that we do. Even the Kiwis don’t have the domestic market able to take as much product, so I think that has built resilience in to our export trade and we’ve seen that this year.
There have been shocks, particularly relating to China and also Qatar has just announced the removal of a subsidy on sheepmeat. The industry will be able to diversify and send that product to other markets.
Josh: If you had to pick one initiative MLA has executed in our international markets or domestically this year that’s assisted our export industry, what would that be?
Jason: I think there are a few we need to highlight. One of the highlights would be the response that the international markets team made, but in the same vein, I think it’s responding to the challenges that we’ve been delivered as an industry and our organisation and being able to still provide benefit to our stakeholders, partners, customers, and consumers.
We did a big social media activity early on in March, April, and May, very focused on higher end cuts that would normally have gone to foodservice. There was also information around freezing and storing red meat and then using stored product. The impact of that social media activity was significantly higher than any other social media campaigns we had previously done.
It's not very sexy telling people how to freeze and thaw meat, but it’s incredibly helpful, not just for people selling the product because they know their customers are better informed, but also for customers who are getting better value out of our product.
Our involvement with MasterChef was another highlight. With Australian Beef an official partner of Australia’s Olympic and Paralympic teams, the activity we had planned in the lead up to the Tokyo 2020 Games obviously had to be postponed and we had to act quickly.
The team connected with MasterChef, highlighting high end, foodservice-style restaurant cuts. It was one of the spokes of the wheel of supporting those cuts and it was really impactful of people’s awareness of beef and recognition of product. The underlying message is we took our resources and made sure we pointed them at activities which supported people and still provided opportunity and benefit for our stakeholders.
Andrew: One thing that stands out, because of the difficulty we’ve had this year in terms of physical events which are an absolute mainstay of our global activities, we obviously had to really grapple with how we could engage the trade who we’ve had great relationships for decades.
We put together a series of Virtual Trade Seminars for key markets to engage the trade but also help Australian exporters engage with their customers.
We brought customers together with Australian exporters and our analysts and marketing staff to talk about the market conditions, our activities, and topics like consumer trends. We’ve had big numbers coming through on the software and we’ve been able to engage the trade in new ways.
Josh: Looking forward to 2021, how are we positioned as an industry?
Jason: I think we’re positioned really well. We’ve got these massive macro drivers around global demand for red meat protein and there’s a number of contributors to that.
The increasing affluence across developing nations, and the ongoing impact of African Swine Fever, which China is recovering from. Even though there has been disruption, these underlying drivers are still there in a huge way. You add that to the reduction in supply domestically and the demand and relationship with have with our domestic consumers here and we’re in fantastic shape.
I think where it puts the onus on MLA is - how do we support the prices that we currently have, how do we work with our consumers to see value in the amount they’re paying for their red meat products and then how do we invest in activities or new ideas that are going to continue to help the supply chain create and capture more value so that we can build on the base we’ve got at the moment. I think 2021 is shaping up to be a really positive year for our industry.
Josh: What should we be looking forward to in 2021 from an international markets point of view?
Andrew: We’ve been talking a lot at MLA this year about diverting resources to projects that can really move the needle and I think one that stands out there is the possibility for a lot of activation around the Tokyo Olympics and Paralympics, and Australian Beef’s sponsorship of the Australian Olympic and Paralympic teams.
It’s a really big deal in Tokyo - Japan last hosted the summer Olympics in the 1960s. Japan is the third biggest economy in the world and an economy that’s been doing it tough for a couple of decades now and I think the Olympics is a fantastic opportunity for Japan to present themselves to the world and it’s a great opportunity for us.
It’s our largest market for chilled beef and by far our largest market for country of origin branded beef. Australian beef is really popular in Japan – it’s really well known, respected and loved by Japanese consumers. We’ve got a great opportunity to bring people together for an Australian barbecue in Tokyo during the Olympics. Obviously, a massive caveat is that the event actually goes ahead in 2021. I think if it does go ahead, even in a slightly modified form, it will be a wonderful global celebration in our largest market in a time zone that’s very hospitable to Australian audiences.
Listen to the full interview in the On the ground podcast here: