THE beauty for beef in the now-signed eleven country trans-Pacific trade deal will be in the double hit of tariff cuts in quick succession.
In key markets for Australian red meat, tariff cuts are to be delivered annually for the next 10 to 15 years which means the first tranche will flow through on December 30 and the second on January 1, with Japan’s second cut at the start of its new financial year on April 1.
Japan, which is Australia’s largest beef export market by value, is where the industry sees particularly strong advantages from the signing of the Comprehensive and Progressive Trans-Pacific Partnership.
Meat and Livestock Australia’s trade and market access manager Andrew McCallum said this deal takes Australia’s access to Japan further than the bilateral agreement already in place.
“The end tariff under JAEPA (Japan-Australia Economic Partnership Agreement) was 19.5 to 23.5 per cent but under the CPTPP that will go down to 9pc,” he said.
There will also be immediate elimination of Mexican tariffs on animal fats, immediate elimination of Canadian offal, processed meat and animal fat tariffs, and elimination within eight years of Mexican sheepmeat tariffs.
Mr McCallum said this offered Australia new opportunities in Mexico and Canada where we don’t currently have bilateral agreements.
Key competitor the United States, under it’s recently renegotiated North America free trade agreement, already has free access so this deal moves Australia into a more competitive position in Mexico and Canada, where demand for high quality beef is fast growing.
Australian Meat Industry Council boss Patrick Hutchinson said the signing of the agreement was excellent news right across the supply chain.
“It’s great for producers and it’s great for those businesses that process raw materials and export value-added products,” he said.
“It’s vital for our sector that all parts of the agribusiness value chain have the best opportunity to maximise existing markets, reach into new markets and continue to build a thriving and sustainable industry, and this is a very big step in the right direction.”
Export volumes up
Japan was a key driver behind a rebound in Australian beef exports to the tune of eight per cent in October over the previous month’s volumes.
The latest Department of Agriculture and Water figures show just under 99,000 tonnes was shipped in October.
Market analyst Ken Wilcock reports Japan’s year-to-date purchases of 262,000t will mean a full-year result of more than 300,000t, a figure not seen since 2012.
This has been achieved against strong competition from the United States, where production cost is down due to elevated supply from a herd approaching the peak of its rebuild, Mr Wilcock said.
While the global beef demand outlook overall is strong, in Japan consumer trends are “absolutely working in Australia’s favour,” MLA’s Lisa Sharp says.
“We already have a healthy 36pc market share here, however that doesn’t mean we don’t have more room for growth,” she told a recent beef industry conference in Brisbane.
“Japanese consumers in general prefer a marbled meat but their younger generation is developing a taste for leaner beef.
“We also see the Japanese market is riding a steak and barbecue trend and consumers want meat they can eat in larger portions.
“For those reasons, Japan’s Wagyu is too rich and too pricey.
“As well, as one of the markers of quality, country of origin, is among the key pieces of information Japanese consumers look at on food labels.
“MLA’s global consumer tracker has revealed that country of origin is important to 92pc of Japanese consumers because it’s a reminder of quality, food safety and integrity.
“Clearly, Australian grainfed beef is well-positioned to thrive in this market segment.”
Global demand outlook strong
Ms Sharp said global beef consumption had grown 20pc over the past 30 years.
In fact, from 1990 to 2017 only seven years weren’t records for global beef demand, she said.
And it is set to continue.
Most major world institutions are forecasting 1 to 2pc growth underpinned by population growth, increasing per capita income, growing middle class, urbanisation and greater trade access.
“While the demand outlook is strong we need to be aware that we operate in an intensely competitive market, with both direct and indirect threats,” Ms Sharp said.
“Increased buffalo meat in Indonesia has displaced some Australian manufacturing meat.
“The increased availability of US beef at more competitive prices has seen intense competition, particularly in retail, in markets like Korea.”
There were also the challenges of global protectionism, notably in the US and Europe, and there were strong protein competitors and soon, artificial replicas, to deal with, she said.