Meat Council plan to beef up sales to China

The Australian meat industry is looking to boost sales to China by 50 per cent to $1.5 billion a year.

The Australian meat industry is looking to boost sales to China by 50 per cent to $1.5 billion a year, according to Australian Meat Industry Council chief executive Patrick Hutchinson.

Speaking to The Australian after a recent visit to China, Mr Hutchinson said that the council was working with the industry in China to implement the details of an agreement reached last year between Australia and China.

The agreement includes opening up the market for sales of chilled beef from Australia to China, sales of more tripe products and allowing more abattoirs in Australia to export to China.

“These measures would collectively add over $500,000 to the bottom line for the meat export industry in sales to China,” Mr Hutchinson told The Australian.

“We are working with the Chinese to put the agreement into place.”

The annual market to China is currently worth about $1bn, dominated by sales of frozen beef worth around $780 million.

Mr Hutchinson said frozen beef was a commodity market in China, subject to intensive competition and the impact of currency fluctuations and supply and demand changes.

“The market for frozen products is very competitive, with suppliers from Brazil, Uruguay and Argentina all selling there,” he said.

He said opening up the market for chilled beef sales was a more attractive economic proposition.

“The opportunity for us to sell the higher-value, higher-quality product is through the chilled supply chain,” he said. “That is what we are aiming at. There opportunities for us in China are increasing by the day.”

At the moment seven plants in Australia are approved to sell chilled beef into China.

The agreement signed last year by former prime minister Malcolm Turnbull and China’s Premier Li Keqiang provided potential for as many as 45 other plants in Australia to sell chilled beef to China.

Mr Hutchinson said Australian sales of beef to China were up by 55 per cent in the first eight months of the year to more than 100,000 tonnes.

Sales of lamb were up by 18 per cent to 47,500 tonnes while sales of mutton were up by 116 per cent to 25,000 tonnes over the same period.

“We have a market which is increasing on an annual basis for us,” he said.

Mr Hutchinson said that Australia’s free trade agreement with China was good for business but it was up to the industry to take advantage of market opportunities in China.

He said there were strong opportunities to sell to China’s growing middle class, which was keen for more protein.

But Mr Hutchinson said he was concerned about the impact of the US trade war with China.

He said the Australian meat industry did not see it as an opportunity to boost sales to China.

US meat sales to China are a fraction of Australia’s. The market for sales of beef from the US into China only opened up last year, after being closed for 14 years due to Chinese concerns about an outbreak of BSE or “mad cow disease” in the US in 2003.

The market was just getting going when China imposed tariffs of 25 per cent on US meat imports in July in retaliation for President Trump’s tariffs on China’s exports to the US.

Mr Hutchinson said trade wars were disruptive and history had shown that any short-term gains by one supplier could easily disappear when the dispute ended.

“Tariff wars really don’t help anyone,” he said.

“What we have seen in the past is that (a trade war) can give you advantages and you can start to supply a product to a market, but when it finishes you have an exposure to the market.”

He said the US was excluded from the market in South Korea for 14 years following the BSE outbreak.

This had created a good market opportunity for Australian sales to the country, but when the ban was dropped last year US beef sales increased rapidly, reducing the market for Australian product.

“We are in a global market. When there are trade wars we have to be cautious.”