Oz Encounter: Australia’s beef export in the Chinese market

Australian beef is incredibly delicious but very expensive. This is a common feeling for many Chinese consumers.

For the last two years, the high price of Australian beef and increased international competition poised a big challenge to the export of Australian beef to China. So how to keep the loyalties of the Chinese consumers and expand new growth in the Chinese market? The Australian beef industry is looking for a variety of ways to solve this problem.

According to the China-Australia Free Trade Agreement, the tariffs on Australian beef imports are dropping every year and will be eliminated by 2024. China has become Australia’s 4th largest beef export market since 2013. However, over the last two years, the frozen beef from Brazil, Uruguayan, New Zealand, Canada and other countries has squeezed the market share of Australian beef in China due to the price advantages.

A report by Meat and Live Stock Australia states Australian beef exports to China were down 37% compared to 2015, totaling 94000 tons in 2016. Moreover, United States’ frozen beef returning to the Chinese market in July this year means bigger threats to the Australian beef industry.

“Among the eight major beef exporting countries, the poor climate conditions in Australia lead to deficit in beef supply and rise in price. Furthermore, China opened up to the American beef market this year,” said Guo Shengxiang, Australian International Economic Research scholar.

At the same time, the consumption on beef imports has risen sharply in China. In 2016, China’s total beef import has increased by 22.4% compared to 2015, totaling 579800 tons and 2.5 billion US dollars. In order to capture the great opportunities in the Chinese market, Australian beef industry has to reposition its competitive advantages.

“In Australia or at Gundooee, we do deep rooted native perennial pastures as more of a sustained growth,” said Rob Lennon, owner and farmer of Gundooee Organic Wagyu.

“Australia is very well recognized as being a reliable and safe supply of beef to world markets. We are in the Asian region; it’s a many shipping days closer to the market. Our disease free status for our beef herd in Australia that makes it very acceptable to consumers in the Chinese market,” said Tony Eyres, Australia’s Senior Investment Specialist for the Resources and Energy sectors.

In the Australian market, it is generally considered that Chinese consumers love premium and high quality beef products. Therefore, Australian beef exporters adjust their strategy to export more fresh chilled beef to China. It gives Australia an advantage on its competition with Brazilian and American frozen beef. Life stock export is also a new opportunity.

“At the moment, China only gives Australia the permission to export livestock. Australia should utilize this agreement to benefit its beef export sector and consumers from both countries,” said Shengxiang.

Except the high quality beef, Australia is looking forward to attracting more investments on the beef processing industry, especially welcomes Chinese investors to leverage the bilateral tie between China and Australia in order to develop Australian beef industry.

“In the case of the Hughenden project, which is an exciting and a very positive project, it involves the construction of a new meat processing facility, many many hundreds of kilometers inland from the coast and from the port terminals, where traditionally the processing capacity has been concentrated in recent times,” said Eyres.

“So, projects such as the Hughenden project, means that the farmers will have essentially a customer in the form of a beef processor closer to their properties, and that means that then there is efficiency for them as producers. And hopefully that leads to further investment in their own businesses to supply beef into the CNVM asset.”

OZ Encounter is a video program produced by People’s Daily Online with introductions and comprehensive information on Australia’s tourism, food, leisure culture, news etc. The program brings information on beautiful views and delicious food around Australia, lead audience to experience the unique landscape and cultural glamour of Australia with micro-video. (People’s Daily Online/ Tingting Yan)