WITH big investments being made by live cattle trade operators in Australia to service the emerging China slaughter market, producers are starting to take stock of just how significant the extra buyer demand in the market will be.
Even against a backdrop of already hot competition for the tight supply of cattle at the moment, the addition of an extra, significant, buyer is not to be taken lightly, producer and industry leaders say.
Cattle Council of Australia president Howard Smith said the expanded marketing options for producers would be very valuable and the China trade would be a ‘whole of Australia’ opportunity.
Exporters suggest Chinese demand for live cattle for immediate processing could see up to 150,000 shipped there this year, and more next year.
Those sort of numbers will make a big difference, Mr Smith said.
While initially, cattle will be sourced from the south due to the Chinese bluetongue virus free zone requirement, the pull-through effect would be immediate, he said.
“This is a very positive event for our industry,” he said.
“As we get the first shipment in place and sort out teething issues, and demonstrate it can be done profitability, we’ll see greater numbers shipped.
“In the north, we’ve recently seen how the boats taking slaughter cattle to Vietnam put a floor in the market and the China trade has the potential to do the same in southern Australia this year.”
Hot on the heels of Elders announcing it is about to put Australia’s first seabound live slaughter cattle shipment to Chinese meatworks on the water, the country’s largest cattle exporter Wellard announced the purchase of a farm in Western Victoria where it will develop a pre-export quarantine facility.
Wellard says the 340 hectare farm, “Clonlee” will be its base to secure and induct beef and dairy cattle from throughout Victoria, South Australia and southern NSW to meet China’s stringent quarantine access requirements, as well as other markets.
Chinese import requirements include a seven-day quarantine period in Australia for slaughter cattle and an ‘all-in-all-out’ policy preventing co-sharing with other consignments.
Wellard general manager China Bernie Brosnan said the company would invest in infrastructure on the property so it can become a modern and efficient facility and that investment would be staged to reflect the level of Chinese export activity.
Wellard last year teamed up with Chinese company Fulida Group to build a series of feedlots and an abattoir in China to fatten and process Australian cattle and market the beef.
Chief executive officer with peak industry body the Australian Livestock Exporters’ Council (ALEC) Simon Westaway said there was certainly strategic investment happening to streamline supply chain logistics in preparation for the China trade.
Easy access to quarantine facilities close to relevant Australian ports was a high priority, while ongoing investment in modern livestock vessels was helping to ensure cattle could be shipped as efficiently as possible, with the world's best welfare standards, he said.
There was also significant in-market investment in China, he said.
The fact infrastructure that complies with Australia’s exporter supply chain assurance system (ESCAS) was being built from the ground up in what will be ‘closed loop’ supply chains meant the highest possible welfare, control and traceability standards were being put in place, he said.
“The scale of the investment is underpinned by the growing demand for Australian cattle and boosts our confidence about the long-term significance of the market,” Mr Westaway said.
“More competition for cattle is a good thing for producers and opening up significant new markets such as the feeder/slaughter trade to China strengthens Australia’s entire beef industry.”
From the exporter’s perspective, the more markets Australia supplies, the greater the stability in the overall trade and the greater the confidence for all to invest in supply chain development, Mr Westaway said.
Livestock exporters were entrepreneurial by nature and were constantly looking for new market opportunities, he said.
“The opening of new trade opportunities in China builds on our existing markets,” he said.
Stable volumes of feeders to Indonesia through December saw live cattle exports finish 2016 at 1.129 million head, slightly up on the expected figure of under a million.
Still, that was down 15 per cent on 2015 numbers, although the previous two years have seen record numbers of live cattle exported.
Meat and Livestock Australia analysts say the the prospect of an 800,000 head export year in 2017 appears more likely than the recent highs, as the northern Australian cattle herd again looks to rebuild.
High cattle prices, short supply, unfavourable exchange rates, vessels coming off contract and policy changes along with market consolidation in some of the key export markets influenced last year’s decline, according to the latest LiveLink report.