AUSTRALIAN beef producers are in supply overdrive but it appears consumers worldwide are shrinking away from beef and lamb.
New projections released by Meat and Livestock Australia yesterday reveal producers are still on target with herd rebuilding on the back of recent wet years which should see greater numbers turned off through to 2015.
The more worrying side of the equation is lacklustre demand at home and abroad for Australian beef, although MLA chief economist Tim McCrae insists the fading preference for higher priced grilling cuts that's driving more consumers towards lower priced chicken and pork is a blip on the radar.
"At the moment we're seeing people hide their money from beef as a result of deteriorating economic conditions worldwide that's seen consumers hold on to their dollars - we don't expect that this will be a long term trend," he said.
"The short answer is that the world will still need to buy our beef in the future, especially at a time when we have more cattle coming on as a result of the herd rebuilding activity of the past two and a half years."
Heading the list of worries for exporters are the markets of Japan and Korea where robust competition from the US and declining consumer demand is combining to create strong headwinds for Australian exporters.
For January to June, Australian beef exports to Japan contracted 10 per cent year-on-year, totalling 150,868 tonnes shipped weight (swt) - the lowest start to a calendar year since 2003.
After an initial forecast of a 15pc decline in 2012, Australia's beef and veal shipments to Korea are now anticipated to total 105,000 tonnes (swt) for the current year - a 28pc decline on 2011's near-record 146,347 tonnes (swt).
While Australian beef is performing stronger in emerging markets such as the Middle East, Mr McRae said the economic problems in our developed markets currently outweigh any benefits from increased shipments to the newer customers.
"In somewhat of a good news, bad news story, a record 31pc of Australian beef went to 'smaller' markets for the 2011-12 fiscal year, but 69pc still went to the traditional markets, or "the big three", of Japan, Korea and the US," Mr McRae said.
"Thus, while export growth to other markets is very welcome, as an export focused industry Australia is still heavily reliant upon its long-term "big-three" export destinations, and as such, any softness in these markets will be felt throughout the industry.
"Beef is currently at a price point in many markets that makes it difficult to compete with cheaper proteins, at a time when consumers are price conscious."
Exports to Russia for 2012 have been revised back to 55,000 tonnes, along with lower expectations for volumes to Indonesia.
Mr McRae said sustained demand from Taiwan and the Middle East, along with an improvement in access for Australian grainfed beef to the EU would assist shipments in the second half of 2012 and into 2013.
Symptomatic of the slower economic activity, especially at retail, the amount of beef destined for the Australian market for 2012 is unchanged on the previous forecast, at 740,000 tonnes carcase weight - up slightly on 2011 due largely to increased production.
The forecast for live cattle exports remains unchanged at 570,000 head, 16 per cent lower than 2011, with 283,000 head or 55pc shipped to Indonesia.
The drought hit US market has generated a staggering 46pc jump in Australian beef exports for the first half of 2012, to 118,120 tonnes shipped weight, with total shipments for the year forecast to reach 250,000 tonnes.
However, the majority of the growth has been in manufacturing beef, with the higher prices in the US attracting shipments away from other markets such as Russia and Japan.
As forecast in January, Australia's cattle herd is expected to continue expanding through to 2015, but at diminishing rates - levelling out at around 31.5 million head (close to the 1976 record of 31.8 million).
Source: farmonline.com.au
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