Australian meat sales to China worth $1 billion: Who cashes in on cattle?

Australia’s meat export market to China has tripled in the past year, according to figures released by Meat and Livestock Australia.

Speaking at a conference in Wodonga yesterday, the MLA’s general manager for trade and economic services, Peter Barnard, said the industry had grown from $300 million to $1 billion in the space of 12 months. By volume, beef sales have also increased by a whopping 400%.

The increase in sales is due to the popularity of Australian Angus and wagyu steaks, with China importing around 142,000 tonnes of Australian beef this year alone.

Cattle Council of Australia president Andrew Ogilvie told SmartCompany the current boom in China is providing an outlet for the large numbers of cattle coming into the market due to dry conditions in northern Australia. However, he is concerned about profits not being passed on further down the supply chain.

“We’re concerned that the demand in export is not translated back to the farm gate,” he says. “But it’s a very complex supply chain and seasonal conditions do have an impact. Over the last few years prices such as transporting cattle have all risen and it’s eroding the profits that can be passed back to the farmer.”

Despite the growth in the meat export industry in recent years, farmers continue to struggle. The prices paid to cattle producers have not changed substantially in the last ten years, with beef prices lower this year than in the early 2000s.

Cattle producers hope the new government will assist farmers by cutting red tape.

“We need these cost pressures to be addressed,” says Ogilvie. “There are a lot of government-imposed costs that can be examined and perhaps mitigated.”

Australians pay a 12-13% tariff on cattle exported to China, while New Zealand pays less than 5% due to its free trade agreement.

In the meantime, Ogilvie says there are other ways cattle producers can ensure a healthy profit margin.

“What all producers need to do constantly is really examine their business model and cost structures. They need to be as efficient as they can be, and produce a product that people want to buy.”

According to an IBIS World report released in September, Australian meat processors export over 60% of their production to international markets. Exports account for more than half of the meat processing industry’s revenue.

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