Wellard joint venture takes beef to China

22 Aug, 2015 02:00 AM
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AUSTRALIA is poised to be a major supplier of cattle to China.

That's the clear message Wellard Rural Exports is sending, after last week announcing its joint venture with private Chinese company, the Fulida Group.

Wellard, Australia's largest livestock exporter, will supply and market Australian cattle and beef into China, develop import feedlot and slaughter quarantine facilities, feedlots and an abattoir to facilitate live cattle trade in China.

Former Wellard managing director and Agricultural Connections Australia director Steven Meerwald said this partnership was a step in the right direction for the industry.

"I think, as an outsider, it is really good news that the Chinese importer has recognised the value that can be gained when partnering up with a very experienced operator in Australia that understands all the issues they will be facing," Mr Meerwald said.

"Wellard has dealt with issues in a range of other markets, so it's good there is a recognition of the value of that intellectual property."

Mr Meerwald said the joint venture partnership will make the process of establishing a trade, under all the regulations, a lot quicker than if they were attempting it individually as two separate companies.

"They will have access to supply chain management, logistics, operation of quarantines and more, it will make their rollout of their facilities and infrastructure a lot more efficient," he said.

"I think that is a great outcome for the companies involved and the industry.

"They have identified a willing partner, they think adds value to their operations in China.

"The important message is the recognition that Australia can be a large supplier of cattle to China."

Wellard and Fulida are 50-50 partners in the Wellao Joint Venture, which will start exporting and marketing Australian beef into China while it progresses the design and construction of a series of feedlots and an abattoir in China to fatten and process Australian cattle and market the beef from those cattle.

"An important part of Wellard's business development strategy in China was teaming up with an established and highly regarded local company," Wellard chief operating officer Scot Braithwaite said.

"Fulida is a well-respected company within China which can contribute capital, strategic business relationships and intellectual property, which is evident by its substantial fibre manufacturing and distribution business.

"Fulida and Wellard share intent to grow and the benefits Fulida provides the Wellao joint venture ideally complement Wellard's expertise in the procurement, transport, feeding and processing of livestock.

"The Wellao joint venture with Fulida delivers that first important plank in a strategy that will bring significant benefits to both Wellard and stakeholders in Australia and China in the live cattle and chilled beef sector."

Pastoralists and Graziers Association president Tony Seabrook said the partnership has potential to open doors to China sooner.

"It was a really good move,'' Mr Seabrook said.

"Getting into China is the biggest hurdle.

"Once you are in, you're home, but it's breaking in that's the hurdle.

"It is an incredible market... which will benefit to WA producers when it happens.

"It could really unlock the North and give them confidence to invest.

"Anytime a boat load of cattle leaves the country, there is less here and it creates greater demand for what's left, it's good news all round."

Fulida Group vice president and Wellao managing director Kanda Lu said Fulida's decision to partner Wellard was based on important supply and demand fundamentals.

"The unprecedented growth of the Chinese economy means more customers are willing to pay more for premium goods," Mr Lu said.

"Chinese consumers are concerned about food quality and safety, and therefore there is a strong demand for reliable and reasonably-priced beef. Australian cattle and beef fit that requirement.

"On the supply side, Wellard is the bellwether of international livestock trading so our project will benefit from its global resources, including access to one of the largest and most modern livestock fleets in the world, and an extensive agri-production base in Australia.

"We predict the joint venture will be a success story for the Chinese agriculture industry and we have no doubts that a long-term and stable demand for beef cattle will benefit both the Australian industry and their farmers as well."

The joint venture's principal objective is to take advantage of the animal health protocol and Free Trade Agreement signed between Australia and China for the live export of slaughter and feeder cattle through the establishment of a live export, feedlotting, processing and beef distribution business.

Its planned export of Australian beef to China will help to establish systems and long-term customers while the live cattle infrastructure is designed and built.

"Teaming up with Mr Qi, chairman of Fulida, and his team has been a terrific step in providing access to the large Chinese market, so the Wellao joint venture's plans tie perfectly into our vertical integration strategy ," said Wellard chief executive officer Mauro Balzarini.

"Reaching the amazing number of 400,000 cattle exported in the past financial year has proven Wellard can do big things. With our growth strategy gathering pace, I have no doubt we can deliver on what it is one of the most exciting markets in our region.

"Fulida will seize this great opportunity of developing strategic partnership with Wellard and devote its full resources and efforts into the 'agribusiness and food' sector, with the aim of forming the group's second core business next to its 'fibre and textile' sector by 2020," said Fulida chairman Jianer Qi.

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