By Philip Hopkins
May 3, 2006
AUSTRALIA'S beef exports, which rose 1 per cent to $4.6 billion last year, face a more volatile future as the US and South America step up competition, according to Rabobank.
Even so, Australian beef export earnings were likely to rise this year and cattle prices remain at record levels, the bank said in a report. Beef exports, which account for two-thirds of Australian beef production, reached 914,000 tonnes last year.
The competition was set to be felt next year when factors constraining exporters in North and South America were resolved, the bank said.
Bill Cordingley, a senior Rabobank analyst said Australia had almost exclusive access to the Pacific Basin's highest-value markets, particularly Japan and South Korea. Australian beef dominates the South Korean market, taking up 72 per cent of all imports last year, up from 56 per cent in 2004. It has almost 90 per cent of Japanese beef imports, after outbreaks of mad cow disease blocked shipments from the US and Canada in 2003.
One non-compliant shipment from the US in January caused Japan to re-impose indefinitely its trade ban on US beef, undoing two years of talks aimed at resuming exports.
Mr Cordingley said South America had been hit by the return of foot and mouth disease in areas of Brazil. The Argentinian Government's decision to suspend beef exports for 180 days in a bid to reduce domestic prices had also undermined overseas customers' confidence.
Australia benefited in the short term, but conditions would tighten from next year, with US beef production forecast to grow and the US looking to return to the Japanese market.
"Such competitive challenges will push down global prices, making productivity gains, quality improvements and remaining disease-free the essential priorities for the Australian beef industry," he said.
Other uncertain factors included:
■The impact growing US domestic production and the return of 1 million Canadian cattle will have on US beef prices.
■The impact of tightening money policy by US and Japanese central banks on domestic demand and exchange rates.
■The likelihood that the spread of avian flu will have a big impact on chicken meat demand.
Mr Cordingley said lot feeding would play an increasingly important role in Australian cattle production.