Slowing meat production signals good price news for beef and sheep

Australia’s sheepmeat and beef producers are set to enjoy strong prices into 2019, supported by a growing global appetite for meat amid limited supply availability, Rabobank’s Global Animal Protein Outlook 2019 indicates.

However, the productive capacity of Australia’s beef herd and sheep flock will be limited by the heavy culling of female cattle and sheep seen in 2018, with any upside dependent on improved seasonal conditions in the year ahead.

Rabobank’s annual outlook for the animal proteins sector, titled Growth Slows Down, As Doubt Gears Up, forecasts a slowing in the pace of growth for meat production in most regions throughout the world next year.

Uncertainty is created by trade tensions, high feed prices and African swine fever contributing to the decline.

READ: More Queensland beef to be exported to Japan and South Korea

Global animal protein production, primarily beef, pork and poultry, is expected to expand by more than one million tonnes in 2019 – well below the five-year average growth rate – to some 500 million tonnes.

Production growth will slow across nearly all key regions, with China predicted to see a substantial production decline, driven by the impacts of African swine fever on its pork sector, the report said.

Brazil’s livestock production, however, is forecast to continue its strong growth trajectory, while the production outlook for North America is also relatively strong,

For Australia – where sheepmeat and beef production will decline, alongside New Zealand – the overall restrained global animal production outlook will provide some upside on the price front.

Good global prices will continue to support Australian prices for finished lambs and cattle in 2019, the report explains.

Rabobank senior animal proteins analyst Angus Gidley-Baird said strong global demand for sheepmeat and limited supply availability will support strong prices through 2019, with New Zealand – the world’s other major supplier of sheepmeat – set to have its lowest lamb kill on record in 2019.

“While further upside beyond record 2018 sheepmeat prices will be limited, prices will remain firm, given strong demand in key global markets such as the Middle East, China and the US,” he said.

Lamb production in Australia will remain restricted in 2019, impacted by higher sheep sales seen in 2018 due to dry weather conditions, said Gidley-Baird.

For Australia’s beef sector, the cattle inventory will remain very low following heavy de-stocking seen between 2013 and 2016, and then again in 2018, due to dry conditions that limited the availability of feed.

Cattle numbers will remain steady at the current low numbers until conditions improve, said Gidley-Baird.

“While limited supplies support cattle prices for producers, supply-chain efficiencies will be tested, with lower volumes available for feedlots and processing,” he said.

“Without substantial rain, 2019 will test many producers, given already-limited and expensive fodder supplies.”

Rabobank expects Australian beef production volumes to fall with lower slaughter numbers and, consequently, export volumes to decline slightly in 2019.

Consultation open for new rules for exporting meat products

​People in the meat trade are being urged to have their say about new rules ​for exporting meat products.

The call comes from the Australian government after consultation on new draft export control rules for meat and meat products were opened on November 7.

The minister for agriculture David Littleproud said the export control rules will bring in modern, flexible and streamlined export laws for meat producers.

“I want to keep the doors open for Aussie meat exporters and this will give overseas markets greater confidence in our products,” said Littleproud.

READ: Lamb skins exports reach $377 million last year with price increasing

“Our industry needs to be responsive to changing overseas market conditions without slugging our farmers.

“These rules will make exporting meat straightforward and cut duplication of paperwork and processes,” he said.

“They’ll clearly outline how meat should be prepared and if permits or certificates are required while maintaining the level of oversight expected by overseas markets.

“This will support access to export markets making sure our reputation for reliable, high-quality meat is upheld,” said Littleproud.

Existing export-related legislation is being streamlined and consolidated into improved legislation in the Export Control Bill 2017 and export control rules.

The Draft Export Control Rules 2020 – for meat and meat products are ready for consultation.

Stakeholders need to make written submissions by December 21, 2018.

Information sessions will be held during November and December. Other opportunities to comment will be available before the full package comes into effect.

More than $11.5 billion of Australian meat was exported in 2017-18.

It is expected that $12.2b will be exported in 2018-19.

The rules will replace the export control orders and parts of the Australian Meat and Live-stock Industry Act and the Australian Meat and Livestock industry regulations.

Australian lemon growers should export, industry specialist says

Australia is seeing an increase in lemon plantings, including growth from growers entering the industry, according to Citrus Australia.

With increased growth there is a push for lemon growers to export produce.

Queensland grower Michael McMahon, from Abbotsleigh Citrus, who is part of the Nutrano Produce group, said that only 4 per cent of Australian lemons are exported, and with 9 per cent going into processing, 87 per cent are sold onto the domestic market.

Nielsen Homescan Data shows that 50.6 per cent of domestic shoppers buy lemons, spending on average $10.36 a year, down almost $2 compared to last year, and consuming 2kg of lemons a year.

READ: Australian orange exports increase but drought still burdens other sectors

“Unlike other products like mandarins and oranges, customers don’t buy volumes when they are on special,” said McMahon.

“It’s inelastic demand. If they want two lemons, they’ll buy two lemons. The customer demand is pretty consistent regardless of price, so it is difficult to promote on price alone.”

Lemon sales spike during Easter in line with fish sales, and they spike again during Greek Easter, said McMahon.

Promotion targeting these special occasions, as well as the health benefits of lemons, is critical, he said.

Abbotsleigh Citrus has made a concerted effort to export more lemons in recent years and develop new markets to avoid the rising tide of Australian-grown lemons and to gain an advantage on exports from South Africa and South America.

The prices Abbotsleigh received in Indonesia for lemons recently was cheaper than the domestic market.

“We still made a profit but we’re thinking long-term and investing in development of export markets,” said McMahon.

He sees opportunities in China, Indonesia, Japan, Canada and the USA.

Hong Kong and Singapore are easy markets for most countries to access, while Indonesia can be unreliable due to quotas, according to Citrus Australia.

Growers exporting produce must be prepared to accept lower returns than have been realised in recent years, said McMahon.

Doing nothing will see returns drop far lower due to oversupply on the domestic market. They must also grow and pack quality fruit ‘to stay in the game’, he said.


Australian orange exports increase but drought still burdens other sectors

Rabobank’s agribusiness October outlook indicates growth in wine and fruit exports, but meat and grains are falling short.

The monthly report shows that fresh orange exports continue to grow in price and volume, as well as wine exports to Canada.

Canada is one of the top wine export destinations for Australia by value.

For July and August 2018, compared to the same period in 2017, Australian exports of all wine to Canada have lifted by about 17 per cent in volume and 7 per cent in value.

READ: Cattle prices trend down as drought conditions increase pressure in market

Fresh orange exports have grown substantially since 2013, with global trade data indicating total Australian fresh orange exports of 197,000 tonnes in 2017.

Global trade data shows that in 2017, key Australian export markets for oranges had increased in value by $107m, which is almost double the 2013 value.

Over the same period, export volumes grew by about 46,000 tonnes, an increase of about 50 per cent on 2013.

Despite growth in some wine and fruit markets, dry weather and frost damaged winter crops in the grains and oilseed sector, with south-west New South Wales missing out on much needed rain over September.

Rabobank reports that parts of Victoria, South Australia and Western Australia were hit with frosty conditions, which caused significant damage to crops.

The Frost and ongoing dry conditions have reduced 2018/19 new crop prospects on grains and oilseeds.

Wool supply is set to continue to fall in the coming months and a dry outlook gives downside potential for young cattle.

A three-month outlook of the weather is expected to bring little rain to the country.

Despite the dry conditions, cattle prices lifted slightly or stayed steady throughout September and some rainfall through eastern states provided hope and ability to hold cattle rather than sell them, Rabobank reports.

September slaughter numbers (567,400 head) in the eastern states continue to reflect the drought-induced sales, up 15 per cent year-on-year.

Beef exports for September (91,668 tonnes swt) remain high, up 4 per cent year-on-year.

China remains hungry for Australian beef with exports up 55 per cent year-on-year, however they still remain Australia’s fourth-largest export market behind Japan, the US, and South Korea.

Live exports in comparison to 2017 YTD (August) are up 21 per cent, with stronger volumes to Indonesia and Vietnam throughout the year to date up 10 per cent and 40 per cent respectively.

In addition, live exports to countries besides Indonesia and Vietnam (such as Malaysia and Middle East) has increased 195 per cent, since 2017 year-to-date.



Australian wine exports to Canada increase in volume and value

In 2017–18, the volume of Australian exports to Canada increased by 11 per cent, to 7.6 million cases, and value increased by 7 per cent to $199 million.

Canada is Australia’s fourth biggest export destination by volume and value.

Exports grew by value to all ten provinces. More than 80 per cent of Australian wine by value is shipped to three provinces – Québec, British Columbia and Ontario.

British Columbia was the stand-out with volume up by 29 per cent and value up by 12 per cent.

READ: Australian wine export grants increase to $1.5 million

Québec, Ontario and British Columbia are also the three largest provincial wine markets in Canada with a combined volume share of 82 per cent.

Québec is the biggest provincial wine market in Canada with total sales of 18.9m cases.

In 2017–18, wine sales grew by 5 per cent, driven predominantly by imported wines from France, Italy, Spain and Australia.

Australia is the fourth ranked wine category behind France, Canada, and Italy.

Australian exports to Québec increased by 2 per cent in volume and 9 per cent in value in 2017–18.

There was growth in both Australian bottled and unpackaged exports, but the growth was significantly stronger in unpackaged exports.

The average value of bottled exports increased marginally to $5.39 per litre, while unpackaged exports increased by 16 per cent to $1.02.

Exports of red and white wines grew, but the growth was much stronger for whites.

Red wine exports increased by 5 per cent to $28m while whites increased by 18 per cent to $15m.

There were 78 Australian companies exporting to Québec during the year – up from 65 the year before.

Ontario is the second biggest provincial wine market in Canada with total sales of 15.8m cases.

In 2017–18, wine sales grew by 2 per cent with wines from Italy, the United States of America and Canada the key growth categories.

Australia is the fourth ranked category behind Canada, Italy and USA.

Australian exports to Ontario increased by 11 per cent in volume and 3 per cent in value in 2017–18.

British Columbia is the third biggest provincial wine market in Canada with total sales of 8.5m cases sold.

In 2017–18, sales were flat in British Columbia with growth in wines from Canada and Italy offsetting declines from most other suppliers such as USA and Argentina.

Australia is the fourth ranked supplier behind Canada, USA and Italy.

Australian exports to British Columbia increased by 29 per cent in volume and 12 per cent in value in 2017–18.


US beef import prices decreasing, but Asian market remains strong

United States imported beef prices are continuously decreasing, driven by weaker prices for domestic grinding beef.

Meat and Livestock Australia reported that US end users appear well covered in the near-term and remain reluctant to accept higher Australian offerings.

Australian manufacturing beef continues to flow through into Asian markets where bids remain strong.

In the US market, from the 1st of October to the end of the year, ground beef prices seasonally record some downwards pressure as the northern hemisphere winter impacts burger sales and retailers start to feature holiday items more extensively.

READ: More than $152m in farm gate returns delivered through Meat Standards Australia

Ample supplies of cheap competing proteins and higher non-fed slaughter are up five per cent on a year ago, which will ensure the US market remains well supplied in the short-term.

Central American countries are offering grinding beef at a notable discount to Australian product and New Zealand supplies could begin to lift as the year closes out, further pressuring imported prices.

The US, Canada and Mexico came to a last-minute agreement in principle on a revised North American Free Trade Agreement (NAFTA), in late September, to be formally known as the United States-Mexico-Canada Agreement (USMCA).

Under the new trade agreement, the beef supply between the respective nations will remain uninterrupted.

Over the last decade, about two million cattle a-year have been trucked from Canada and Mexico into US feedlots and abattoirs, representing about eight per cent of the US steer and heifer slaughter.

Boxed beef has been regularly traded in both directions across both borders.

In terms of agriculture, the US has been granted improved access to Canada’s dairy, chicken, turkey, and egg markets as a result of the renegotiation.

Countries place value on different aspects of food products, export advisor says

Making a few changes to marketing campaigns and packaging could help a product succeed in an overseas market, according to Export Connect director Najib Lawand.

Lawand spoke to business owners at an export forum during the Fine Food Australia expo in Melbourne in mid-September.

Having worked in the food and beverage industry for 20 years, across the public and private sector, Lawand helps companies make the right decision when it comes to moving into an overseas market.

Speaking to Food and Beverage Industry News after the forum, Lawand explained the differences between Australia and overseas markets.

READ: Fine Food Australia expo in Melbourne showcases the country’s best

Common trends across Australia and other markets include a focus on health and convenience, but portion sizes need to be different in different markets, he said.

Ready-to-go and pre-prepared meals are also appealing to an increasing number of consumers across all markets, he said. “People want to have the feeling that they’ve cooked.”

But, within the precooked meals and ready-to-eat foods categories, Australian exporters may need to adjust their product’s portion and packaging sizes, said Lawand. 

“The main difference is that in Asia they go for smaller pack sizes, whereas we go for bigger pack sizes.

“They have small fridges, small pantries. Often the apartments are smaller and suburbs are more compact.

“It’s not just about what you do with the products in terms of packaging. To succeed, you need to do your homework and build your business model around it,” said Lawand.

Another big difference is how a product is sold. In Australia it is common to shop in-store, whereas in Asia e-commerce is very big.”

When looking overseas, businesses should think about e-commerce, which also helps to cut out the middleman, he said.

Asia and the Middle East are favourable regions for food and beverage exports, said Lawand. 

“Asia and the Middle East have great opportunity because there’s a demand for allnatural products which also have a quality angle and a trust element.

Healthy and free-from products are gaining in popularity around the world, and in particular in these regions.”

Australia’s clean, green environment gives companies a reputation that appeals to these markets, he said.

“They see Australians as living healthy lives.”

Many Chinese consumers and other Asian markets want to explore Western food, said Lawand.

Asian markets are especially appealing for Australian businesses because of the increasing value placed on Australia’s food standards in this region, he said.

It is also a natural extension when commercial capacity has been reached on the domestic front. For many Australian suppliers, especially larger producers, their market has reached top growth, and that’s when they start looking offshore.”

Overseas markets are virtually limitless as hundreds of millions more consumers can be reached, said Lawand. 

This is especially so in regions of high growth, such as Asia. “Urbanisation is quite rapid in the Asian market, so there are more shopping centres, apartments, office buildings, supermarkets, convenience stores and cafes,” he said.

However, it comes with its challenges.

“We recommend Singapore because it’s easy to get into, but they only have a couple of million people.

“You can go to China too, but meeting compliance and getting through CIQ (China Inspection and Quarantine) is very difficult. If you are very well connected that’s where you will have the most opportunity,” said Lawand.

To succeed, Lawand suggests considering packaging, marketing and retail distribution methods on a case-by-case basis.

People without established connections can either put in the legwork to make it happen, or employ the services of those who have already, and can help build a connection to those markets, said Lawand. 

Victoria secures an international food trade event that will boost investments

The Victorian government has helped secure a major international trade event that will boost investment and create jobs.

In September 2019, Melbourne will host Global Table – one of the largest food business events in Australia, with more than 5,000 participants.

Global Table will involve a series of internationally-focused business events that Australia as a destination for investors and traders to connect with business leaders from across the Asia‑Pacific.

Attendees will enjoy a diverse program in Melbourne and across regional Victoria catering for a range of audiences including researchers, retailers, entrepreneurs, food buyers and investors.

READ: Countries place value on different aspects of food products, export advisor says

Minister for trade and investment Philip Dalidakis said the government had set an ambitious target to grow the region’s food and fibre exports to $20 billion by 2030.

“Key to achieving this goal is the investments outlined in Taste Victoria,” he said.

Food and Wine Victoria will deliver the event – drawing on its expertise delivering the Melbourne Food and Wine Festival, which is part of the Victorian government’s $15 million Taste Victoria initiative.

Organisers have already confirmed they will partner with Seeds&Chips – The Global Food Innovation Summit.

Taste Victoria will bolster the state’s thriving food and fibre industry, and help Victoria grow its presence in the global food market and capture export opportunities.

Food and Wine Victoria chairman Radek Sali Melbourne is the ideal destination for this globally important event.

“From our farms, wineries, breweries and laboratories to our cafes, markets, restaurants and bars, I’ve got no doubt international visitors will be impressed by what they experience during Global Table.”

The Growing Food and Fibre Markets program will be key to this initiative, which aims to grow and safeguard Victoria’s high quality, premium exports.


Lamb skins exports reach $377 million last year with price increasing

The price of lamb skins has increased to 900ȼ per skin, with more than $377 million exported from Australia last year.

Prices increased in January after staying at about 700-750ȼ per skin since June 2017, according to the latest Meat and Livestock Australia (MLA) markets report.

Of more than $377 million exported raw sheep and lamb skins last year, 92 per cent went to China.

Australian Hide, Skin and Leather Exporters Association executive officer Dennis King said the skin trade can be influenced by social and political factors.

READ: Red meat exports have hit a high of $13.7 billion, superseding last year’s figures

“The fashion industry is particularly susceptible to influence from activist groups and, in recent years, we’ve seen big global brands move away from using leather products in favour of synthetic alternatives,” he said.

“While this has had an effect on demand for hide, the market for lamb skins remains strong,” said King.

The pending elimination of a 7 per cent tariff on sheep skins by 1 January 2019 under the China–Australia Free Trade Agreement is also not expected to have a significant impact, he said.

“Australia and New Zealand are the main producers of sheep skins, so the volume of product cannot be sourced from other countries.

“In terms of quality, Australia produces a superior product, so our market should remain secure,” said King.

Simon Matters, who manages Thomas Foods International’s skin, hide and wool division, said about 60 per cent of lambs processed by the company will make the cut for the premium skin market.

“The ideal lamb skin will have at least half an inch (1.2cm) of fine, dense wool – this is crucial for the premium market, as these skins will be used for high quality garments and underlays,” he said.

“Best practice management on-farm for fine wool tends to flow through to skin value as customers pay a premium for finer microns and unmarked hides,” said Matters.

Weather discolouration to the tip and staple of wool can have a detrimental effect on skin value, as this cannot be dyed out, and shearing cuts and branding fluid also reduce skin quality.

“Australia has a reputation for producing premium skins – our skins are highly sought after and it’s important we retain this status,” said Matters.

Red meat exports have hit a high of $13.7 billion, superseding last year’s figures

In the year ending June 2018, Australian red meat, offal and livestock exports reached $13.78 billion.

This is up 13 per cent year-on-year and largely underpinned by an increase in cattle turn-off and higher smallstock prices, according to figures from Meat and Livestock Australia.

Beef export value didn’t surpass the drought years of 2014–2016, but it was the third highest financial year on record at $7.96b.

With lamb prices smashing records in recent months, lamb exports reached a record $2.27b, and mutton followed suit at $1.02b.

READ: Australia’s sheepmeat exports to China saw the largest ever start to the year

Combined sheep and beef offal exports broke records at $778 million, while live cattle and sheep exports accounted for significant portions, at $1.268m and $259m respectively.

Japan, the US, Korea and China continued to underpin the value of beef exports, with the four largest markets accounting for 75 per cent of export value.

Similarly, the Middle East and North Africa, the US and China accounted for 66 per cent of sheep meat export value.

Live cattle exports remain focused on Southeast Asia, reflecting the level of development across key markets and proximity to northern Australia, while sheep exports remain concentrated in the Middle East and North Africa, underpinned by demand for religious slaughter.

National cattle slaughter has increased, due to challenging drought conditions.

National cattle slaughter for July totalled just over 712,000 head, bringing the year-to-date total to 4.5 million head, up 21 per cent year-on-year.

Female slaughter has continued to be a driving force in this increase, making up 54 per cent of the national kill in July, up five percentage points on July 2017.

The 12-month rolling average for July was 48 per cent.

Typically, the Australian cattle herd is considered to be in a contraction phase when the proportion of female slaughter exceeds 47 per cent of total slaughter over a 12-month rolling average.