PUSHING Australia’s safe, clean and green beef credentials and continued government-to-government work to build in trade efficiencies will be the plan of attack for dealing with the inroads cheap Indian buffalo is making in our valued Indonesian market.
India has been among the top few largest bovine exporters in the world for the past five years and has this year taken the top spot from Australia, reflecting our supply-driven decline in available product.
India is the cheapest large supplier of frozen commodity beef.
Meat and Livestock Australia (MLA) figures show during the September quarter the average export unit value for boneless frozen buffalo was A$3.91 per kilogram free on board, compared to Brazilian beef at A$5.15/kg, Australian at A$6.05/kg and the United States at $7.13/kg.
While Vietnam is India’s largest single market, of note is the near 10,000 tonnes shipping weight sent to Indonesia in August and September.
The Indonesian Government opened the doors to Indian buffalo, despite having a foot-and-mouth disease free policy, in an attempt to bring in price stability for beef and has subsequently issued permits to import additional Indian buffalo.
Most of the frozen boxed product coming from India is going to the manufacturing sector, primarily to make bakso balls, but some Indian buffalo is ending up on the wet market.
Reports are it is thawed and hung for sale alongside locally-slaughtered beef sourced live from Australia.
MLA’s general manager of international markets Michael Finucan said studies conducted prior to India gaining access to Indonesia showed the buffalo could displace up to 75 per cent of Australian boxed beef exports and up to 55,000 head of live cattle.
He prefaced that, however, by saying the study looked at open access, which was not occurring - Indian buffalo imports remain tied to a permit system.
Australia’s boxed beef exports to Indonesia were actually up 51pc year-on-year at the end of November, due largely to changes in access for secondary cuts.
Indonesia remained a complex market for Australia, with the political environment continuing to ebb and flow, Mr Finucan said.
“At this point, we are trying to understand what the situation is and what the job is that needs to be done,” he said.
“Work needs to continue at a government-to-government level to build efficiencies into the trade and provide price stability.
“And communicating the importance of our foot and mouth disease-free status will be a priority.
“We have ongoing marketing programs for boxed beef aimed at affluent consumers and our boxed beef will still play a significant role in the upper end of the Indonesian market.
“While Indian buffalo is a much cheaper protein, consumers like to buy fresh beef - that is why our live trade works so well.”
Indian buffalo is also being sent to Malaysia, the Philippines and the Middle East and in these markets Australia had been very successful in differentiating its product on a quality basis, he said.
Rabobank senior analyst animal proteins Angus Gidley-Baird said India’s growth in exports in the past five years had been fuelled by the growing demand for cheap bovine product, particularly in South East Asia, coupled with the rise in demand for dairy products.
That latter trend had driven increased numbers of buffalo in India, with the unproductive dairy heifers and bull buffaloes forming the majority of India’s bovine exports.
Up to 80,000 tonnes of Indian bovine was expected to be imported to Indonesia by the end of the year but at this stage, the impact on Australia appeared minimal, he said.
“That 80,000t could potentially replace 450,000 head of cattle, which is significant when compared to the volumes of live cattle Australia sends to Indonesia,” Mr Gidley-Baird said.
“However, the market is a little more complicated than a simple substitution as there are different consumers and different segments.
“Indian buffalo is definitely a strong competitor however it can be the case that live cattle, boxed beef and carabeef can all coexist.
“Vietnam is a good example of that but price will be critical.”
Mr Gidley-Baird said the data from India suggested that total bovine exports had actually declined slightly in 2015-16.
Even if Indian exports declined further there may be substitution from other markets into Indonesia, he said.