Unlike Australia in Argentina for inst we never export more that 20% of our beef production, as the demand on the home market takes 80 to 85% of our production.
What outside commentators do not realize, is the fact we have a double price structure in South America the “Black price”, which are cash payments for cattle on the home market and the published price for export eligible cattle.
Prior to 20 months ago our prices were riding at 20% less than Australian prices and we had never enjoyed parity of price with Australian beef, let alone achieved higher prices.
South American prices are now settling back to a level where they belong, this will have no effect on the Australian beef industry, except the Australian beef exports to Chile that will come back to Argentina merely because of the “Taxi Fare”.
When I read headlines like this morning in an Australian meat web site. Suggesting that there is some new milestone being set in beef prices, I wonder where these journalists get their information or rather where have they been for the last 10 years.
Unlike most countries, Australia exports the majority of the red meat it produces. In 2009 62% of the red meat produced was sent overseas (excluding goatmeat and offal) and valued at $6.3 billion.
Historically Australia's red meat exports have been heavily weighted towards North Asian and North American markets. In recent years though, exporters have been diversifying the mix of markets, with a stronger focus on markets in South Asia and Greater China, and the Middle East.
Not only are the destinations of Australia's exports changing, but the composition is shifting too. MLA's latest Composition of Australian red meat exports Red Meat Market Report (published May 2010) highlights some of the key trends that were apparent in the March quarter of 2010.
Brazilian beef exports increased 30 per cent year-on-year in May, to 83,000 tonnes swt. After a sluggish start to the year, beef exports for the first five months of 2012 are now 3.1 per cent above year ago levels, at 339,000 tonnes swt.
Contributing to the price competitiveness of Brazilian beef has been a significant decline in the strength of the Brazilian currency, the real, along with an increase in cattle throughput.
The real decreased 18.4 per cent year-on-year to the end of May, falling from a high of 62US¢ in May 2011, to average 49US¢ in recent weeks. The depreciation has been influenced by a significant tightening of monetary policy within Brazil, with the Brazilian Central Bank cutting interest rates by 400 basis points since August 2011. The latest interest rate cut (30 May) of 50 basis points took the official cash rate to 8.5 per cent.
These interest rate cuts come as Brazilian policy makers look to shore up an increasingly sluggish economy. The World Bank revised down its 2012 growth forecast for Brazil from 3.4 per cent to 2.9 per cent in its latest global outlook released in June.
The decrease in the real has come at an opportune time for Brazilian beef exporters, as supplies have increased with the onset of the dry season. The increased supplies have also been reflected in the physical market, with the Sao Paulo cattle market index decreasing from $US3.25/kg in January, to $US3.04/kg as of 13 June (FNP).
Although Brazilian beef exports have increased in the five months to the end of May, exports to Russia, historically Brazil’s largest beef export market, have started 2012 slowly. The ban put in place by Russia on a number of Brazilian beef processing plants in June 2011 has limited the amount of Brazilian beef able to access the Russian market, constraining export growth.
An increase in exports to other market has helped to compensate for the reduced market access into Russia, including to Chile, Hong Kong and Egypt.
These changes reflected:
•Tighter grassfed cattle supplies, following widespread rain, which impacted production.
•Cautious buying in the US.
•Positive performance of the Japan fast food sector, along with lower stocks in this market.
•The continued decline in sheepmeat production.
Australia is among the world's largest and most successful and efficient producers of commercial livestock and a leader in the export of red meat and livestock. The total value of Australia's off-farm beef and sheepmeat industry is A$16 billion (source: 2011 MLA estimate).
•Read about the cattle industry
•Read about the sheep industry
•Read about the goat industry
The national sheep flock, now at around 68.1 million head, is down on the historical highs of 1960 when it reached 170 million. This reflects a more competitive international fibre market, land use changes in the agricultural sector and, more recently, the ravages of drought.
Similarly, the beef cattle herd size is down to 26.6 million head from the 1970s high of 30 million (source: ABS - Agricultural Commodities, 2010). Dairy cattle contribute an additional 2.6 million head to the cattle herd, and the national goat flock stands at 3 million.
Australia is a world leader in the export of commercial livestock. The live trade is a significant contributor to the Australian rural economy and has provided an important market for Australian cattle, sheep and goat producers for more than 30 years.
Australians consume an average of 46.5kg of red meat each year. This is made up of 33.7kg of beef, 10.8kg of lamb and 2kg of mutton.
MLA promotes the high quality of Australian red meat to both thedomestic and international markets.
Promotional activities are undertaken directly with retail consumers as well as foodservice outlets, such as hotels and restaurant chains, highlighting red meat's versatility and enjoyment, and value for money, with a particular focus on the important nutritional role red meat has in a healthy diet.
Marketing red meat around the globe
The domestic market is the largest market for Australian beef and sheepmeat. Australia is also the world's largest exporter of red meat and livestock, exporting to more than 100 countries. MLA works to develop brand recognition for Australian red meat in our export markets, and to position our products as high quality, premium products that offer enhanced customer enjoyment. Australia's 'clean, green' image and our reputation as a supplier of safe, quality red meat underpin MLA's international marketing activities.
The eating quality of Australian red meat, and the systems to guarantee this quality, along with the sustainable production and environmental considerations taken by the industry, also form part of MLA's marketing activities. Programs such as Meat Standards Australia and MLA's integrity program, which is focused on connecting the red meat industry with urban Australia, help to achieve this.
Primal value in the US - North America
MLA recently launched a new lamb value-adding resource for the US foodservice sector. From cuts to cuisine – A professional's guide to Australian lamb has step-by-step cutting instructions to add value to primals such as shoulders, loins and legs 16 different menu concepts. More North America marketing and market information
Energising demand for beef - Japan
New marketing material has been developed as part of the iron marketing campaign in Japan, focusing on promoting the energy provided by iron. Read more Japan marketing and market information
Customers roll up for in-store sampling - Korea
Customers at 122 Tesco supermarkets across Korea had the chance to taste Australian Black Angus beef from in-store sampling, where chilled chuck roll and chuck eye roll were offered at a 30% discount. Read more Korea marketing andmarket information
Retailers get red meat know-how - China
Chinese retailers had the opportunity to improve their handling skills and knowledge of Australian red meat during MLA training sessions in Guangzhou, China, throughout August.. More South East Asia & Greater China marketing and market information
Cooking lamb is child's play - The Philippines
More than 350 children applied to take part in an MLA-supported Junior Chef Challenge in the Philippines, where the top fice contestants had to prepare a complete meal using Australian lamb as the main course in their final challenge. More South East Asia & Greater China marketing and market information
Australian meat top of the world in Moscow - Russia
A crowd of almost 60,000 wholesalers, distributors, retailers and restraunteurs got to taste and see cooking demonstrations using Aussie Beef at the prize-winning Australia meat stand at the World Food Moscow tradeshow. Such events lead to partnerships that see exhibitors' products stocked in shops and supermarkets throughout Russia. More Russia marketing and market information
Promoting alternative cuts - Middle East
Chef workshops showcasing the versatility of beef and lamb and designed to increase carcase utilisation and reduce dependency on loin cuts, were held in Egypt, Lebanon and Jordan. More South Middle East & Northern Africa marketingand market information
Source: Argentine Beef Packers S.A.
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