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ATAHK reads from Xinhua News that Australian beef farmers have a serious stake in China's growing appetite for steak, and, according to the latest research, there will be opportunities, if the sector here understands its customer, until the proverbial cows come home. For details, please refer to the following news from Xinhua News on September 6th:
As the mining and resources party gutters out, Australian economists have been banking on agricultural resources to fill the void.
BULLISH ON BEEF
If the booming Aussie beef sector wasn't certain of its impressive bull run, the reproach report released Friday by the Australia and New Zealand Banking Group (ANZ) will turn the remaining skeptics into true believers.
ANZ's report of China's Great Beef Challenge, A Golden Opportunity for the Australian Beef Sector, says China's hunger for beef could see consumption rise by 70 percent in just 15 years.
According to the ANZ report, which is a top-to-toe study of the opportunities as well as the challenges, the Australian beef sector will need to meet to "maintain current market share until 2030," could represent growth of 10 billion Australian dollars (9. 3 billion U.S. dollars) per annum to the Australian economy.
Australian Agriculture resources have been long tipped to take off where mineral resources began almost a decade ago, with a China-inspired boom for Australian producers, who currently supply just under 60 percent of China's beef imports.
Both sides of the political landscape here have been gleefully referring to Australia as the Food bowl of Asia in anticipation of growing demand as Asia's middle class expands at breakneck pace.
However, while the ANZ, with its own toehold in the China market, has a clear interest in reaffirming the importance of Asia, and particularly China, to local beef producers, the state of play is very different.
STAY CALM AND CARRY ON
Australia's Minister for Agriculture Barnaby Joyce is one of the few voices in the Australian industry calling for less bombast and more pragmatism.
"We're not going to be the food basket of Asia," he said in May after returning from Prime Minister Tony Abbott's official delegation to Asia.
"We've got to dispense with that rhetoric. It's ridiculous. It is read as a threat (to farmers) overseas."
"Even in China, I think their beef herd is about eight times the size of ours, so let's stop talking about that."
Joyce said, "I'm trying to return it back to logic."
And logic shows that China is very much in the backseat as local beef exports hit record highs last month.
The Department of Agriculture's data for August showing beef and veal exports topped 111,872 tons, following a 24 month upward trend and 15 percent up on the same period last year.
While falling short of the all-time high registered just a month earlier, July reported exports were over 121,520 tons, the August yield still represents the second highest month of beef and veal exports on record.
U.S. REMAINS NUMBER ONE
But, according to peak industry body, the Meat and Livestock Association (MLA), its the U.S., not China that is currently driving Aussie exports.
Shipments to the U.S. have boomed, almost doubled, from the same time last year at 37,449 tons.
This total easily confirms the U.S. as the largest export market for Australian beef.
Exports to another traditional buyer, Japan, were also up year- on-year, touching 27,049 tons, while, in contrast, volumes to South Korea (12,140t) and the Middle East (4,288t) were slightly down year-on-year.
According to the MLA, the recent drought induced a spike in slaughter and exports, but enthusiasm in the traditional markets continues to grow.
This is not to say the ANZ has got the wrong end of the cow.
ANZ's Director of Agribusiness Research, Michael Whitehead, said, "The Chinese beef industry currently provides around 81 percent of domestic demand. Our research suggests that by 2030, China's beef producers will only be able to account for 62 percent of demand, meaning imports will need to rise almost 250 percent."
MINERS TURN INTO DINERS
And so, there is movement at the ranch.
Australia's largest state, the resource rich state of Western Australia (WA), is bolstering its farming ties with China, on Thursday signing an MoU in China's southern major city of Haikou, representing an important stage in opening up live cattle exports to the giant meat processing hubs on Hainan Island.
The MoU commits WA and Hainan to working together in beef and other industries, as WA pushes ahead with plans to double the value of beef and other agriculture production over the next decade.
But it is Iron Ore magnate, Andrew Forrest, who has drawn the headlines here with a bold play into the beef sector all reportedly on confidence in China's demand for Australian beef.
Earlier in the year, as iron ore prices began their long-term decline, Forrest acquired WA's only licensed beef exporter to China, telling reporters Australia could ramp up production by more than half should it secure a supply position in the Chinese market.
Forrest's Minderoo Group purchased WA producer Harvey Beef in a surprise move that could well begin an Australian rush from minerals to meat.
In a statement, Forrest said, "Harvey Beef has been an iconic brand for almost a century.. Following detailed discussions with the Chinese leadership, we are determined to ensure that the Australian agricultural industry's future in China is just as bright as our mining future."
Meanwhile, the Department of Agriculture and Food and WA will share expertise and technical knowledge with counterparts in Hainan with a focus on livestock including beef supply chain strategies to expand feedlot and beef processing opportunities.
Live exporters and the WA state government have also signed two similar deals with sister State Zhejiang. "We are leading the way in opening up live cattle and exports via Hainan Island, a natural landing place for livestock from WA," Baston said.
It is believed a Hainan processor had initial talks with billionaire Andrew Forrest and Elders about live cattle exports.
Paul Bloxham, Chief Economist of HSBC Bank (Australia and New Zealand), told Xinhua, awith mining investment now falling, resource exports will eventually plateau.
"The question then becomes, where will Australia's new trade opportunities lie? As with the resources boom, these new opportunities are likely to come from emerging Asia.
"Agriculture should be a key sector to benefit," Bloxham said, "as growing emerging market incomes boost demand for agricultural commodities, goods for which Australia is already a leader in global export markets.
"Rising incomes in Asia should also present significant trade opportunities for the tourism, education and business services sectors. The global center of activity is shifting increasingly towards Asia and Australia is well-placed to continue to take advantage of the opportunities this will present."
The global middle class is projected to increase by 1.3 bln by 2030 - with most of this growth in emerging Asia.
New and hungry consumers on Australia's regional "doorstep" now present the most promising opportunities for Australia's trade beyond the mining boom.
And even the miners themselves now have a stake in it.
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