THE substantial business connections of billionaire Gina Rinehart may prove a critical link in finally prying open the valuable China live trade of slaughter and feeder cattle market.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
This is hope of many in the northern live cattle trade game, both exporters and pastoralists.
The need to get the Chinese doors open to northern cattle is intensifying as Australia’s advantage in other South East Asian markets deteriorates.
Interest is intense in the Hancock pastoral empire’s plans for a large scale feedlot and abattoir for cattle imports on an island off southern China, which could provide the quarantine buffer necessary to appease protocols related to bluetongue disease (BTV).
Until now live export beef slaughter shipments to China, touted to be the most lucrative development in the industry’s history, have been limited to stock from bluetongue-free southern Australia.
Northern Territory Livestock Exporters Association chief executive officer Stuart Kemp said opening new markets on a government-to-government level was always a slow thing.
The ‘proceed-with-caution’ approach on China’s part was entirely understandable and expected, he said.
However, the entry of such a large commercial interest, one with established relationships and a clear understanding of the way business is done in China, could see the wheels on the trade start to turn much faster, he said.
“To have this agribusiness working from the importing end is a very positive thing and can only improve our chances of opening this market,” he said.
“It is a very good thing there is a player with such substantial connections through mining coming into our business with an appetite for growth - that enthusiasm is welcomed with open arms.
“Of course, they are not the only ones doing this - other businesses are very engaged - but certainly it improves the chances of northern producers being able to access that market.”
While the potentially enormous and very attractive Chinese market for live slaughter cattle has been hampered by short supply in Australia, it has also so far been limited to young Angus or Bos Taurus types not available in the north, while BTV protocols are nutted out.
The need for market diversity has been long established in the northern live trade industry, Mr Kemp said.
A lot of energy and time was being put into opening China.
“We have had a competitive advantage in South East Asia for a long time but recently that is starting to be eroded,” he said.
“We have reached a critical price point where there is market pushback.
“The Indonesian Government has been keen to reduce beef prices, making it difficult for importers to trade.”
As cattle supply dried up in Australia, shipping capacity also shrunk.
Industry estimates have it scaled down by more than 50 per cent in a year - 20 vessels back to six.
The latest feeder and slaughter cattle live export figures show May exports were the largest this year, however volumes remain well below historical averages.
Exports in some key markets are back 35pc year-on-year, courtesy of both short supply and in-market challenges.
Northern ports to the end of March are down 60,000 head year-on-year, with Mr Kemp saying there has been a clear reluctance to chase cattle at the current high prices.
There is also not much to chase.
“We’ve had an exceptionally good wet season in northern Australia and producers are under no pressure to put stock on the market,” he said.
“They currently have the sort of feed reserves they haven’t experienced for a long time.”
July and August may see increased numbers on the market as the quality of feed deteriorates, typical of the halfway mark in the dry season.
“Still, our catchment for live export is down two million head,” Mr Kemp said.
Indian buffalo
Just what the effect the massive amounts of low value Indian buffalo meat flowing into Indonesia is having on demand for Australian cattle is still unclear.
Livecorp and Meat and Livestock Australia report Indonesia looks set to bring in an additional 50,000 tonnes of Indian buffalo over coming months.
“Indian buffalo should help to satisfy the Indonesian government’s push for affordable product,” Mr Kemp explained.
“It should be competing at a different price point to Australian beef.
“What has happened, however, is the Indonesian Government has continued to put pressure on importers to reduce the price of Australian beef.
“And there is the added obstacle of bringing breeders in as well.”