Australian beef sales to China are set to surge more than eightfold this year, providing a boost for farmers in the world’s third-biggest exporter struggling with tougher US competition in traditional markets such as Japan. Chinese demand for beef is growing as the diet of wealthier consumers change to include more protein. But production has lagged domestically, where pork tends to be more profitable, boosting the outlook for overseas beef suppliers such as Australian Agricultural Company Ltd and Nippon Meat Packers’ Australian unit.

China will become Australia’s fourth-largest beef export market in the year to June 30, 2013, with imports jumping to around 50,000 tons from about 6,000 tons a year ago, data from government research group the Australian Bureau of Resource Economics and Sciences (ABARES) showed on Tuesday. Australian beef exports were already on the rise before a ban on imports from rival Brazil, and the longer-term demand outlook was encouraging, analysts said.

“In the last six months there has been a bigger jump in China’s beef imports from Australia because China blocked beef imports from Brazil due to mad cow disease,” said Jean Yves Chow, a senior livestock analyst at Rabobank in Hong Kong. “China doesn’t buy from the US because of the same issue as Brazil, so you don’t have many options but to buy from Australia. At the same time China’s demand continues to increase.” China, the world’s third-largest beef producer, is likely to see output rose marginally to 5.58 million tons in 2013 from 5.54 million tons last year, according to the US Department of Agriculture.

Markets such as China are dominated by sales of lower value frozen beef, meaning while sales are rising sharply, returns are not going up as fast.

Source: AsiaOne Mar 2013


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