Pork accounts for almost two-thirds of meat consumption in China and due to scale, even small changes in China’s pork consumption and production can have a profound impact on global trade and prices.
The number one topic of discussion in global meat circles over the past couple of months has been the ongoing spread and impact of African Swine Fever (ASF) across China, and into other key pork markets such as Korea and the Philippines.
China’s pig herd has been devastated by the ASF epidemic, with outbreaks occurring in all provinces across mainland China.
Accounting for half the world’s pork production (over 50 million tonnes prior to 2019), the scale of this issue is colossal. Vietnam, Cambodia, Laos, Myanmar, Mongolia and, more recently, South Korea and the Philippines have all reported ASF outbreaks and have begun combative measures. Recent MLA analysis covered this spread and the implications.
Pork accounts for almost two-thirds of meat consumption in China and due to scale, even small changes in China’s pork consumption and production can have a profound impact on global trade and prices.
Estimates for the 2019 pork production range from 20-40% decline (or 10-20 million tonne cwe). This represents a significant shortfall, and there is not be enough surplus meat traded on the global market to fill the gap.
For Australian red meat exports, it is unlikely we will see the average Chinese consumer switch from cheap pork to a more premium and expensive Australian beef or lamb product.
While substitution from pork to Australian red meat may be limited, ASF will lift all meat markets to varying degrees (i.e. it will have a knock-on effect from the commodity market upwards).
Australia’s red meat fortunes in China have been, and will continue to be, largely dictated by the growth in affluent consumer segments, not ASF, however, it has contributed to accelerated demand so far this year.
Australia’s elevated drought induced supply has benefited from the surging demand from China, with beef export volumes for the year-to-September up 73% on 2018 and sheepmeat export volumes for the year-to-September up 37% on 2018.
Launch of State of the Industry Report 2019
This month we have seen the Red Meat Advisory Council (RMAC) launch the Australian red meat and livestock industry State of the Industry Report 2019. The report, compiled by Meat & Livestock Australia (MLA) on behalf of the red meat industry, provides a single and comprehensive overview of Australia’s red meat and livestock industry, including figures on production, consumption, exports, and the economic significance of the industry.
The report confirmed Australia is the world’s largest sheepmeat and goatmeat exporter, and third largest beef exporter behind Brazil and India. Australia exported 65% of beef, 73% of sheepmeat and 90% of goatmeat production in 2018, valued at more than $13.5 billion.
This makes Australia the world’s largest red meat exporter by value. Australia is also a major player in the livestock export trade, exporting 1.1 million cattle and 1.2 million sheep, worth a combined $1.5 billion in 2018. The report highlighted that while Australia is a relatively small producer of red meat, it plays a big role in global export markets. To read more detail, click here.
Korean beef safeguard triggered
Australia has triggered the 2019 beef safeguard to Korea – with the imported beef tariff increasing from 24% to 30% until 31 December 2019.
The beef import safeguard is a mechanism that allows Korea to increase tariffs temporarily once imports exceed an agreed level under the Korea-Australia Free Trade Agreement (KAFTA).
The safeguard volume for 2019 is 170,673 tonnes swt and increases by 2% each year. Strong demand in Korea for Australian beef has led to the annual safeguard volume being fully utilised since KAFTA entered into force in 2014.
https://www.mla.com.au/news-and-events/industry-news/global-wrap-with-michael-finucan-mla-general-manager–international-markets5/
