In non-metric terms, Australia’s beef industry is currently enjoying the greatest boom on record. The nation is increasingly positioning itself as a key supplier of high-quality, premium-grade meats to Chinese consumers. This year’s SIAL Shanghai, arguably one of the world’s largest food and beverage trade shows, has felt different. What a presence it is, and what high praise it has recently earned.
Murray Davis, regional manager for Meat and Livestock Australia in Greater China, said demand for Australian grain-fed beef from China is increasing rapidly. Demand is through the roof at the moment! It’s a good problem to have,” he exclaimed, “At SIAL our pavilion was 300 square metres, and we were totally overwhelmed with buyers the whole show!” Underneath this excitement, however, lies a troubling current. Australian beef exports to China have exploded this year.
Strong Demand for Australian Beef
Nothing has changed to suggest that the fundamentals supporting Australia’s beef trade with China are anything but strong. Davis personally underscored that the Chinese demand for Australian beef is still robust. He was realistic about the economic headwinds, such as a dampened consumer confidence and ups and downs on the property cycle. Consumer sentiment is somewhat depressed, and the stock market and home values have fallen. We do believe there will be a 200,000-tonne-a-year market,” he told.
In just the last month, China has tripled its intake of Australian grain-fed beef. This change occurred largely due to the United States being pushed out of the market by trade disputes. The U.S. has historically been one of China’s largest competitors in the beef trade. That’s what made its pavilion at SIAL Shanghai so oddly quiet and subdued, as various U.S. exhibitors and leaders took a pass on sending anyone in person.
Davis went on to mention, “Australia is indeed front and center in China. We’re crushing it at the premium end of the beef market!” This announcement further highlights Australia’s current strategic advantage in capitalising on the increasing demand for premium quality beef in China.
Opportunities and Challenges Ahead
David Harris, CEO of the Australian Agricultural Company (AACo), was unsurprisingly bullish as he pointed to an impressive earnings forecast ahead of its upcoming financial results. He even pointed out that AACo exports some of that beef to China. That’s because China is not a key customer for any of its common brands. He conceded that Australia’s ability to perform well in the Chinese market serves to strengthen their hand in other global markets.
Harris commented on the continued, high-level negotiations over the tariff impacts between Australia and China. He said there have been positive dialogues more recently between importers, distributors, customers, and our staff about the tariff. This further spotlights our proactive approach to avoiding or mitigating trade complexities.
Against that backdrop, Harris had to come to the conclusion—even with some weak signals in the market—that demand is still booming. For one, he noted that there is a lack of local supply in the U.S. market. He went on to say, “Local supply is extremely tight, creating great opportunities in the U.S. in the short to medium-term.”
The Future of Australia’s Beef Industry
Overall, as Australia establishes itself further into the Chinese market, both opportunities abound and challenges arise. Ongoing forces in the current environment of international trade will be key to determining the future landscape for Australia’s beef sector.
