China’s economy might be slowing, but its appetite for beef is not.
New figures show China imported a record 294,963 tonnes of beef in July, mostly from Brazil.
Global Agritrends meat analyst Simon Quilty said he believed the record month was largely due to Brazil clearing out a backlog of beef after an atypical case of mad cow disease earlier in the year forced a temporary trade ban with China.
“At one stage there was around 40,000 tonnes stuck on the docks because of disputes around production dates and shipping dates,” Mr Quilty said.
“But once that was resolved, some of the Brazilian product that was held back went out in shipments and there was a renewed confidence in China.
“So I think a combination of factors have led to this record.”
Mr Quilty said he expected China’s demand for beef to “remain firm”.
“I think we’re on track for another healthy year from all supply countries into China,” he said
“So even though there’s a slowed economic growth [in China] we’re confident its need for beef will remain pretty strong for the next few years.”
Data from Meat and Livestock Australia shows Japan has been Australia’s biggest market for beef and veal exports this year with 120,000 tonnes, closely followed by China with 115,000 tonnes, the United States with 112,000 tonnes and South Korea with 104,000 tonnes.
Mr Quilty said he expected China or Korea would be Australia’s largest beef customer this year.
“A lot of Australia’s beef exports are going to China, but not particularly at good prices though,” he said.
“So let’s not mistake this for strong demand, it’s just Australia is pricing itself into that market at competitive levels, which is a really important fact.”
Learning from the past
Mr Quilty said the current situation facing China’s economy was similar to what happened in Japan in the 1990s.
“It was known as the lost decade in Japan, but I would say it was the found decade in terms of importing meat, and Japan really falling in love with Australian and US beef,” he said.
“So even though it was a challenging time for many industries, red meat exports from Australia to Japan doubled during those 10 years, and prices by the end of that decade were up 40 per cent.”
He said like Japan in the 1990s, household savings in China were now some of the highest in the world and he felt Chinese consumers would use that to maintain a certain standard of living, which involved significant spending on food.