China set to become Australia’s biggest beef export market
African Swine Fever will lead China to overtake the United States and Japan as Australia’s largest beef export market in 2019, as Chinese consumers shift away from pork to other proteins in the wake of the catastrophic disease.
Chinese beef imports have risen by 53 per cent so far this year, with imports from Australia increasing by 65 per cent.
Rabobank’s senior animal proteins analyst for China Chenjun Pan, who visited Australia last week, said China’s demand for beef will continue to grow, with the country expected to source 30 per cent of their beef from overseas markets by 2025.
“This is a total turnaround from just 10 years ago when China was a net exporter of beef and an increase on last year, when 20 per cent of the country’s beef was imported,” she said.
Ms Pan says while beef is still considered a premium product, at double the price of pork, domestic production can’t keep up with demand.
“There is a structural supply shortage in China, with the national cattle herd declining from around 127 million head in 1999 to around 88 million head in 2018,” she said.
“This has been driven by resource and environmental constraints. Furthermore, government policies and incentives available to the pork industry are not extended to the beef industry, resulting in a highly fragmented industry and little in the way of research into genetics.”
The recovery from African Swine Fever disease, which has wiped out 200 million pigs in China, is set to take at least five years.
Ms Pan said while the Chinese Government was offering financial support for farmers to rebuild their devastated pig herds, interest was constrained due to difficulties in managing African Swine Fever. There is no cure and no vaccine for the haemorrhagic disease.
“At the moment there’s not many farmers who want to expand their herd, because the risk is still there and there’s no tools to control the disease if a farm is affected,” she said.
“Any restocking that’s happening is only on a very small scale.”
China’s pig herd has halved in the past year to 200 million pigs as a result of African Swine Fever. It is not just China that has been gripped by the disease, with the virus confirmed recently in South Korea and prevalent in many South-East Asian countries and parts of Europe and Africa
Australian-based senior animal proteins analyst Angus Gidley-Baird said China’s increased demand for beef has helped prop up the Australian beef price this year.
The increased Chinese demand had flow-on effects to other markets for Australian beef.
“There’s been a redistribution of protein around the world,” he said.
“The US import price for Australian beef has lifted through the first half of this year. Due to the fact that increased volumes of Australian and New Zealand beef are going to China means the US have to increase what they’re willing to pay.”
Mr Gidley-Baird says while African Swine Fever offers great opportunity for the Australian beef sector, particularly across the next 12 to 24 months, our competitiveness will fall once the nation receives widespread rain, and more restockers enter the market, leading to a further increase in cattle prices.
“The Chinese market is very sensitive to price, and while we are competitive with the likes of South America at the moment, once our prices increase — and they are coming off a high base — they are likely to remain high,” he says.
“This means the risk is that when our own supply comes back on board, it could be at a time when there is a lot of supply from South America and the US on the global market.”
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