How have key beef export markets tracked in 2017?

Key points:

• Australian beef exports are likely to end 2017 in line with 2016 levels, with positive growth in Japan and China offsetting declines in Korea and Indonesia.
• 2018 looks to be a challenging year in Australia’s export markets as many key competitors increase beef production.

Australian beef exports are shaping up to end 2017 in line with 2016 levels, with both chilled and frozen consistent with last year’s volumes. There have been some changes in the destination of our exports for the year, with an uplift in volumes going to Japan and China helping to offset a drop off in volumes from Korea and Indonesia.

2018 is shaping up as a challenging year for Australian beef exports as production is anticipated to increase across both the US, Brazil and India.

Japan

Japan will finish 2017 as Australia’s biggest export market for beef, despite tough competition faced from the US throughout the year. The increase in volume to Japan has been driven by growth across both frozen grainfed and frozen grassfed beef, with the chilled segment remaining stable.

There have been a few key reasons behind this, one of which was frozen beef imports hitting safeguard volumes in July 2017, which saw tariffs on frozen beef from ‘non-EPA’ nations (e.g. US, NZ, Canada) ‘snapback’ to 50% until 1 April 2018. This has given Australia a 22.8% advantage for frozen beef exports in this time, with Australian frozen beef exports only incurring a 27.2% tariff under the JAEPA.

Another factor has been successful in-market promotions, such as the continuation of MLA’s ‘Let’s Barbie’ campaign, which saw the use of pop up stores as the centerpiece of the campaign. These provided a showcase for Aussie beef and included live cooking demonstrations, amongst other activities.  

Strengthening of the True Aussie brand in Japan, which only launched in 2014, has also been ongoing. MLA research has shown that 40% of Japanese consumers recognise the logo. Knowing the provenance of food is highly important to Japanese consumers and the True Aussie brand helps support the reputation of Australian beef’s quality and safety.

US

Beef exports to the US are on track to end the year in line with 2016 levels yet continue to be challenged by rising domestic US beef production. However, robust US domestic demand driven by an increased retail focus on beef (resulting in lower retail prices) has helped absorb much of this increased domestic production.

The US continues to take a growing share of Australian chilled grassfed exports heading to both the foodservice and retail channels. US consumers perceive grassfed beef as better for animal welfare, the environment and more ‘natural’, which is helping grassfed beef to find its way onto more menus in the US.

There have also been some key market activations in the US, including a new partnership with Big Green Egg smokers and MLA’s Food Influencer program, which includes food bloggers, to ‘Make the Outdoors Greater’ this summer with True Aussie Beef and Lamb.

Korea

For the first time in five years, a decline in beef exports to Korea is expected in 2017. The increase in US production and consequent easing of US beef prices has created strong competition for Australia in this market. Combined with Australia’s triggering of the safeguard tariff (increasing the tariff from 29% to 40% for the remainder of the year) and reduced local production, the US grew to become the largest supplier to the market in 2017. However, Australian beef is still very popular with Korean families and remains a favourite among imported beef whilst we also retain a dominant position in most retailers.

China

Over recent years, Australia’s beef exports to China have been relatively volatile, with changing import protocols and the easing of restrictions placed on other countries impacting exports. In 2017, beef export volumes to China increased again after a significant drop in 2016. Almost all of this growth has been driven out of frozen grassfed product, which makes up close to 70% of Australian exports to the market.

Looking forward, China remains a very price-sensitive market and hence a challenging market for Australia. Changes in market access for Australian chilled product are occurring – where Australia was the sole approved supplier of chilled beef to China up until 2017, China has now granted access to the US, approving 37 establishments, and New Zealand on a preliminary six-month trial basis involving 10 establishments.

South-East Asia

It has been a mixed bag for exports to South-East Asia in 2017, with shipments to our major destination Indonesia down. However, shipments to Australia’s second largest destination – the Philippines – jumped up significantly. The growth in the Philippines has predominantly consisted of frozen manufacturing cuts, while volumes to Indonesia have fallen with the increasing presence of cheaper Indian buffalo meat.

Other markets

The Middle East North Africa (MENA) region has been quite stable in 2017, with some slight declines in Australia’s biggest markets for beef Saudi Arabia and Dubai being offset by increases in some of our smaller MENA markets such as Kuwait, Abu Dhabi and Qatar. Volumes to Europe have dropped off in 2017 across both the UK and other destinations, caused partly by high Australian cattle prices and growing competition for limited quota allocation.