Caution over China market

Live animal export veteran Steve Meerwald has warned the industry about putting too much emphasis on the Chinese market.

Mr Meerwald, former chief executive of Wellard and now head of Sequoia Agriventures and partner with Ivan Rogers at Taurindi Beef, made the warning while speaking at the last week's WAFarmers beef conference about international industry comparisons and Australian beef supply chain efficiency.

He said it was topical to make comments about the Chinese market on the back of industry excitement about the world's second- largest economy formally signing a live export protocol expected to be worth billions to the Australian cattle industry.

His comments come days after the ratification of the protocols and Perth-based Wellard's agreement with China's Fulida Group.

Wellard and Fulida are 50-50 partners in the Wellao joint venture, which will initially ship and market Australian beef to China (see story on page 31).

"The only figure that is ever quoted is from Federal Agricultural Minister Barnaby Joyce last year that Australia will be aiming to export more than 2.2 million head of cattle a year and that is just not realistic," Mr Meerwald said.

"Harvey Beef is getting more than 20 inquiries a week from China about the import of containers of beef and inquiries from people in Australia that have got somebody in China that wants to import beef.

"But when push comes to shove, it gets down to they want low-quality cuts and they have to be chilled."

Mr Meerwald said China had built the current live export health protocol around a similar set of requirements they have for breeding cattle.

"Breeding cattle protocol adds about $500 to the cost of the animal, before they go on to the ship," he said.

"The cattle have to be selected, bled and tested on-farm before they are even eligible to be exported.

"Then the meat is put into 30-day quarantine, before it is tested again and with that there is significant rejection rate."

Mr Meerwald said the Australian regulatory process was almost irrelevant to China because they monitored everything themselves.

"All of this adds to the cost of the feeder and slaughter cattle," he said.

Mr Meerwald said it would be testing for producers to be competitive against exporters from other countries selling into China.

"They will want the cost of the meat to be competitive, under these stringent conditions," he said.

Mr Meerwald said bluetongue disease zoning in Australia and China added a layer of complexity.

"There a different export requirements depending on whether you are from the north or around a bluetongue zone in Australia," he said. "Also, there are different requirements if you are exporting to a bluetongue zone in China.

"This market is fraught with complications and extremely difficult to deliver at a low cost, which is what the expectation in the emerging Chinese market will be.

"China will happen but a lot more slowly than what has been anticipated and it will be complicated."

Mr Meerwald also said his former company's move into China was a good first step.

"The Chinese will need to understand our Exporter Supply Chain Assurance System," he said.

"Having a strong export partner from Australia will be helpful and hopefully there will be a lot of intellectual property transferred across so there are minimal animal welfare issues."