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ABARE’s March Quarter Australian Commodities report suggests that the US is approaching an easing of import restrictions, which have been in place in Korea since an outbreak of mad cow disease in the US in 2003.
“Certainly we would agree with the ABARE prognosis that there is likely to be breakthroughs in the negotiations between the US and Korea,” Meat and Livestock Australia chief economist Peter Weeks said.
“A little less certain (is the possibility of) the breakthrough in negotiations with Japan. In both cases it will make the import protocols for the US easier and a lot more product getting into both markets, which will have a significant impact on our exports,” Mr Weeks said.
According to the ABARE report the US is unlikely to ratify its impending free trade agreement with Korea unless the market is opened fully to US beef.
With speculation that this will happen later this year or early next year, Australian beef exports to Korea are forecast to decline by as much as 19 per cent, down to 110,000 tonnes in 2008 – 2009, as US market access increases.
If the US gains full access by 2009-10, Australian exports to Korea are expected to decline even further. ABARE predicts Australian beef exports to Korea will sink to 90,000 tonnes by 2012-13.
“Eventually the US is going to end up with a zero tariff for beef into Korea and we’ll still have, potentially, a 40 per cent tariff and that will virtually knock us out of the market over a 15 year period,” Mr Weeks said.
“In the Japan case, they don’t have a free-trade agreement in place at this stage, that gives them any preferential beef access. We are in the throes of negotiating an agreement with Japan where we are hoping that we will be able to get a reduction in tariffs.
“So we’re not at a disadvantage in Japan yet, or Korea, but the prospect is that we will be in Korea soon.”
The good news is that the Australian export beef industry continues to enjoy a healthy reputation as a supplier of high-quality product to overseas markets, with branded beef sales increasing all the time.
“Supply alliances are very important,” Mr Weeks said.
“That sort of relationship we’ve built up in recent years and that sort of reputation we’ve built up as being ‘clean-green’ if you like, but also a safe and reliable supplier, is going to put us in good stead and that’s the sort of emphasis we’ve got now in terms of both the industry-wide marketing programs that are there, but more particularly the individual programs that companies are running there from Australia.
“There’s a lot of emphasis on brands and integrity of brands, reliability of supply, and the quality of product that’s behind those brands, which has really improved greatly in the last three or four years.
“We’re now supplying a lot of grain-fed product into both markets. Local brands have always been a feature of the Japanese market but increasingly the adoption of foreign brands, Australian brands, in that market is taking off too, so that’s a good development.”
Another key factor in Australia’s favour is the healthy state of the beef industry following years of severe drought.
“(We’re in) surprisingly good shape, given how severe the drought’s been and how prolonged the drought has been in Australia,” said Mr Weeks.
“The herd really hasn’t changed in the last couple of years. We’re still over 28 million, which is in fact a higher herd, by about a million, than what we had when this long drought started in 2002.
“So we’ve done fairly well in terms of total herd. We’ve also got a feedlot capacity that is 20 to 30 per cent higher than it was just five years ago, and at a record level.
“So we’re in good shape in terms of our processors. We’re in good shape in terms of our capacity to supply, particularly to supply clean, green and safe quality product.
“So we’re pretty confident going forward. I think the next year is going to see only a small fall in supplies, particularly on the grain-fed side, due to the impact of the very high grain prices currently, but we’ll get over that in time as well.”
“Certainly we would agree with the ABARE prognosis that there is likely to be breakthroughs in the negotiations between the US and Korea,” Meat and Livestock Australia chief economist Peter Weeks said.
“A little less certain (is the possibility of) the breakthrough in negotiations with Japan. In both cases it will make the import protocols for the US easier and a lot more product getting into both markets, which will have a significant impact on our exports,” Mr Weeks said.
According to the ABARE report the US is unlikely to ratify its impending free trade agreement with Korea unless the market is opened fully to US beef.
With speculation that this will happen later this year or early next year, Australian beef exports to Korea are forecast to decline by as much as 19 per cent, down to 110,000 tonnes in 2008 – 2009, as US market access increases.
If the US gains full access by 2009-10, Australian exports to Korea are expected to decline even further. ABARE predicts Australian beef exports to Korea will sink to 90,000 tonnes by 2012-13.
“Eventually the US is going to end up with a zero tariff for beef into Korea and we’ll still have, potentially, a 40 per cent tariff and that will virtually knock us out of the market over a 15 year period,” Mr Weeks said.
“In the Japan case, they don’t have a free-trade agreement in place at this stage, that gives them any preferential beef access. We are in the throes of negotiating an agreement with Japan where we are hoping that we will be able to get a reduction in tariffs.
“So we’re not at a disadvantage in Japan yet, or Korea, but the prospect is that we will be in Korea soon.”
The good news is that the Australian export beef industry continues to enjoy a healthy reputation as a supplier of high-quality product to overseas markets, with branded beef sales increasing all the time.
“Supply alliances are very important,” Mr Weeks said.
“That sort of relationship we’ve built up in recent years and that sort of reputation we’ve built up as being ‘clean-green’ if you like, but also a safe and reliable supplier, is going to put us in good stead and that’s the sort of emphasis we’ve got now in terms of both the industry-wide marketing programs that are there, but more particularly the individual programs that companies are running there from Australia.
“There’s a lot of emphasis on brands and integrity of brands, reliability of supply, and the quality of product that’s behind those brands, which has really improved greatly in the last three or four years.
“We’re now supplying a lot of grain-fed product into both markets. Local brands have always been a feature of the Japanese market but increasingly the adoption of foreign brands, Australian brands, in that market is taking off too, so that’s a good development.”
Another key factor in Australia’s favour is the healthy state of the beef industry following years of severe drought.
“(We’re in) surprisingly good shape, given how severe the drought’s been and how prolonged the drought has been in Australia,” said Mr Weeks.
“The herd really hasn’t changed in the last couple of years. We’re still over 28 million, which is in fact a higher herd, by about a million, than what we had when this long drought started in 2002.
“So we’ve done fairly well in terms of total herd. We’ve also got a feedlot capacity that is 20 to 30 per cent higher than it was just five years ago, and at a record level.
“So we’re in good shape in terms of our processors. We’re in good shape in terms of our capacity to supply, particularly to supply clean, green and safe quality product.
“So we’re pretty confident going forward. I think the next year is going to see only a small fall in supplies, particularly on the grain-fed side, due to the impact of the very high grain prices currently, but we’ll get over that in time as well.”
