IT was a challenging year for global exports in 2021 as COVID-19 continued to create supply chain and logistical issues.
As a result of these challenges, beef and veal exports from Australia were back in 2021, however there are promising signs the industry will rebound with Meat & Livestock Australia (MLA) reporting in its Beef Industry Projections report in February.
It said at an international level there were promising signs that Australia's key export markets would continue to show strong interest in our beef products.
It said Australian beef would also enter a significant high-value export market when the United Kingdom (UK)-Australia Free Trade Agreement (FTA) comes into effect later this year.
MLA said with economies recovering from the pandemic and the world reopening, demand for Australian beef was expected to grow in line with improving supply of processor ready cattle from the second half of 2022.
In 2021 Australian beef and veal exports declined by 14.6 per cent to total 887,682 tonnes.
MLA said Australian beef and veal exports averaged AU$9.36 per kilogram over 2021, which represented a 7.6pc increase on 2020 prices.
However lower volumes saw an overall decline in total value of beef exports of 5.1pc to $9.1 billion through the year.
Japan was Australia's largest customer in 2021, with MLA reporting it imported 216,000t of Australian beef.
This volume was back 13pc on 2020 and MLA said this decline was due to several factors.
It said firstly, beef imports dropped overall by 2.6pc as local production increased and the food service sector remained depressed as a result of COVID-19 related disruption.
Secondly, it said the large increases in export volumes from Canada, New Zealand and Mexico ensured that demand was met.
Finally, it reported price increases in Australian beef also placed downward pressure on demand.
Of Australia's other major trading partners, South Korea was the only market to import slightly more beef in 2021, with MLA reporting it imported 165,000t compared to 161,000t in 2020.
MLA said this was largely due to significant increases in frozen grainfed beef imports, which rose by 27pc to 42,769t to contribute to 24pc of the total Australian beef exports.
It said at the same time, frozen grassfed beef, which made up 58pc of exports in 2020, dropped by 10pc.
MLA said this shift in the export mix - alongside the overall increase in volume - meant that the value of beef exports to Korea rose to AU$1.7b, which was an 18pc increase on 2020 value.
In 2021 the US imported 145,024t of Australian beef according to MLA which represented a 32pc decline on 2020 and this was by far the largest decline among Australia's major trading partners.
MLA reported American domestic production reached a record 12.7mt carcase weight but this was unlikely to continue into 2022.
Looking forward there appears to be plenty of positive demand signals for Australian beef and veal exports.
MLA said Chinese beef imports were projected to grow by about 10pc over 2022 to about 200,000t.
Australian exports to China are forecast to increase about 3pc over the year, but MLA said most of the increase in China's imports were likely to come from Brazil and Argentina, which are forecasted to increase exports by 16pc and 26pc respectively.
MLA said despite this increase being only marginal from an Australian perspective, the huge increase in export demand was likely to drive price increases.
Another market which MLA expects to see growth in, in the coming years is the UK market.
Over the years the UK has been a small but high value export market for Australian beef, with the vast majority of product being chilled.
MLA said once the A-UK FTA entered into force - likely later in 2022 - Australia would benefit from much-enhanced access to the market: in particular, a tariff-free volume of 35,000t of beef in year one increasing to 170,000t by year 15, beyond which no quotas or safeguards will apply.
When it came to live cattle exports in 2021 it was an extremely challenging year for Australia's live cattle export industry and many of the challenges are expected to continue throughout much of 2022.
MLA reports in 2021 a total of 771,931 cattle were exported, which was 26pc less than 2020, but somewhat higher than the previous forecast following a stronger than expected December.
It said tight supply and record high cattle prices in Australia had been the main factors behind reduced import demand for Australian live cattle in virtually all export markets during 2021.
MLA also said pandemic-related challenges had also continued to weigh on affordability and demand and in places, some supply chain disruptions while the herd rebuild in southern areas of Australia has been at the expense of northern herds to some extent.
Going forward MLA expects live exporters will continue to face tough competition for cattle from restockers, including processors and lotfeeders.
It said other factors such as a rising Australian dollar and oil prices have added to live export trade pressures.
But on the positive side, MLA said exports to Indonesia had been remarkably resilient despite high prices and this market was being driven by strong demand.
In 2021 MLA reported Australia exported 406,781 head of feeder cattle to the Indonesian market, which was down only 12pc on 2020.
MLA said the surge in December exports was largely driven by strong feeder demand in Indonesia.
It said this increase in demand in December was a result of Ramadan falling on April 2 and Eid al-Fitri on May 2 this year, which meant importers needed to purchase feeders in December and January in preparation for the religious festival period.
In further encouraging signs for live Australian cattle exports to Indonesia MLA said indications were that in 2022, Indonesia would import less Indian buffalo meat and Brazilian beef than in 2021.
While the Indonesian market remained resilient in 2021 the same couldn't be said for the Vietnam market.
MLA reported Australian slaughter cattle exports to Vietnam saw a dramatic fall of 48pc in 2021 following a strong growth trend since 2014.
It said demand had been weak due to cattle oversupply and the impacts of COVID-19 on purchasing power and restrictions which had reduced dining out, particularly impacting what is usually seasonal consumption peaks.
It also reported Australia had faced new competition from a shipment of Brazilian cattle which entered Vietnam in late September 2021 at a notably lower price point.
Looking at 2022, MLA said Australian exports to Vietnam this year will depend to an extent on Brazilian imports and it remained unclear whether Vietnam would accept more shipments from Brazil in 2022.
MLA also reported Chinese demand for Australian breeder cattle fell 20pc in 2021 compared to the previous year and this was largely the result of high Australian cattle prices, with China increasing its total cattle imports 32pc year-on-year up to October 2021.
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