Australian grainfed beef in Japanese demand

09 December 2015


Australian grainfed beef in Japanese demand

Underpinning beef exports to Japan in 2015 has been grainfed product. After 11 months, volumes are up 9% year-on-year, at 128,388 tonnes swt – the highest volume for this period since 2011.

Conversely, overall Australian beef exports to Japan for the year-to-date are 263,204 tonnes swt, down marginally (1%) from the previous year (Department of Agriculture).

As a result, the grainfed proportion is 49%, the highest level on record. This, along with strong Australian beef prices in general, is contributing to higher values for the Australian beef trade with Japan – 21% above the previous year at A$1.544 billion for the year-to-October (ABS).

Looking ahead, there are several factors that are likely to influence Japanese beef demand in 2016, particularly for grainfed beef:

Positives

  • US is the largest competition for Australian grainfed beef in Japan, and its currency is anticipated to remain strong against the Japanese yen and A$.
  • The Japan-Australia Economic Partnership Agreement (JAEPA) continues to deliver tariff cuts for Australian beef. With another tariff reduction scheduled for April 2016, Australian chilled beef will be imported at a 30.5% tariff rate for chilled, and 27.5% for frozen, while the tariff for US beef remains at 38.5%.
  • Increased commitment by Japanese end users with Australian brands and trade relationships, following the JAEPA and shortage of US product.

Potential constraints

  • Lower Australian beef production in 2016
  • US beef production is forecast to recover gradually from 2016
  • US increasing its trade and promotional push in the market, in anticipation of a recovery in exports. Some buyers are reportedly willing to re-engage with US suppliers to secure supply
  • Japanese consumers opting for cheaper proteins at supermarkets (major outlets for Australian chilled grainfed beef)

Other factors

  • Implementation of Trans Pacific Partnership (TPP) – a regional economic framework that will reduce beef import tariffs further, but also set Australian and the US beef at a ‘level playing field’. This is not anticipated to occur within 2016.

As for grassfed beef, Australia will remain a dominant and critically important supplier to the Japanese foodservice and food processing/manufacturing sectors. That said, export volumes will hinge upon Japanese buyers’ ability to bid against international equivalents, under the anticipated reduction in supply.

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