CONNECTING AUSTRALIAN BEEF PRODUCTION TO GROWING … · CONNECTING AUSTRALIAN BEEF PRODUCTION TO GROWING ASIAN DEMAND ... Australian Beef is known for its high quality and oversight.
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CONNECTING AUSTRALIAN BEEF PRODUCTION TO GROWING
ASIAN DEMAND
Troy Setter – CEO ABARES Outlook
Conference
1st March 2016
WHO IS CPC?
2
CPC is Australia’s largest private cattle producer with a current capacity of over c.375,000 head in Australia.
Our history goes back to 1860 with the company consolidated in 1983.
With 20 cattle stations covering 5.7m hectares in Australia and 2 feedlots in Indonesia.
Currently over 230 staff in Australia and 250 staff in Indonesia.
Terra Firma (UK Private Equity) acquired 95% of CPC in 2009
3
CPC’S STATIONS, FEEDLOTS AND CONNECTION TO CUSTOMERS
4
CONNECTING AUSTRALIAN SUPPLY TO ASIAN DEMAND
Source: MLA – 2016 Beef Projections Workshop
Beef Production Down 13% In 2016
AUSTRALIAN BEEF PRODUCTION
AUSTRALIAN BEEF PRODUCTION
Source: JBS
1985 2015
Northern Australian Based Processing
6
7
AUSTRALIAN BEEF PRODUCTION CONNECTING TO ASIA – CHILLED AND
FROZEN
Source: JBS
Australian Beef Processing
Advantages • Optionality domestic v export
• Cuts based marketing
• Significant number of markets
• Cheap container shipping per kg
• Growing demand
Challenges
• Australian processing cost
• Increasing competition
Processing costs – Australia is • 2.4 times higher than the US
• 3.0 times higher than Brazil
• 1.5 times higher than New Zealand
• Up to 20 times higher than Indonesia
• Up to 10 times higher than Indonesia
8
AUSTRALIAN BEEF PRODUCTION CONNECTING TO ASIA – LIVE EXPORT
Source: JBS
Australian Live Export
Advantages • Location to markets
• Feeding in country with lower priced feed
• Local labor
• Growing demand
• Offal and fresh access
Challenges
• Australian shipping costs
• Increasing competition
• Limited cuts based marketing
• Once in country, hard to re export
Regulation Challenges • Australian Government regulation cost
• AMSA
• ASEL
• ESCAS
• Importing country Government regulation
ASIAN POPULATION GROWTH AND CONSUMER TRENDS
China imports over 20% of its
beef requirements - represents
approx. 15% of the total global
trade in beef.
Sources: World Population Statistics, Rabobank, Macquarie and Forbes
Over 3.6bn, or roughly
half the globe now live in
Asia.
The rise of the Asian Beef
consumer
9
By 2030, the rising middle classes of China and
India will account for approx. 40% of global
consumption.
Australian Beef is known for its
high quality and oversight.
Rising & expanding Asian
middle class – consuming
more beef.
Australia’s competitive advantage -
the vast majority of Asia is less than a
10 hour plane ride away from
Australia.
10
BEEF CONSUMPTION IN ASIA
Source: MLA
Beef Consumption per Capita (2004 – 2024f)
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
OECD Countries
Korea China Indonesia Vietnam
2004 2014 2019f 2024f
Beef Imports – China Projected to Become More Dominant in
Global Beef Trade Over the Next Decade
11
AUSTRALIAN BEEF PRODUCTIVITY NOT KEEPING UP WITH DEMAND
0
50
100
150
200
1978 1990 2000 2012
Index of total factor productivity
Rates of productivity growth
in the Australian beef
industry:
• 1978-2013 1.3%
• 1988-2000 1.9%
• 2000-2012 0.7%
Productivity growth in the Australian Cattle industry has been softening
Source: JBS
LIVE EXPORT MARKETS
12 Source: MLA
-
200
400
600
800
1,000
1,200
1,400
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Indonesia Vietnam China Other
Australian Live Exports to Asia (2000 to 2015)
CURRENT MARKET ENVIRONMENT - INDONESIA
Source: MLA Industry Insights – Market Snapshot – Indonesia – Feb 2016
Consumption of Protein in Indonesia Grocery Retail Market Shares
INDONESIA BEEF PRICE
Source: MLA – 2016 Beef Projections Workshop
Jakarta Wet Market Prices Keep Increasing
15
INDONESIA
16.
CURRENT MARKET ENVIRONMENT - CHINA
Source: Rabo AgForce - January 2016
China’s total beef consumption is expected to reach around 7.25 million tonnes in 2015 and increase to around 8 million tonnes in 2020
(BMI).
Beef Imports – China Projected to Become More Dominant in Global
Beef Trade Over the Next Decade
CPC CHINA EXPERIENCE
18
CURRENT MARKET ENVIRONMENT - BRAZIL
Source: MLA Industry Insights – Brazil – Feb 2016
Brazilian Live Cattle Exports Brazilian Beef Exports
CURRENT MARKET ENVIRONMENT - BRAZIL
Source: MLA Industry Insights – Brazil – Feb 2016
Efficiency in First Stage Key for the US When Compared to Brazil and Australia
CURRENT MARKET ENVIRONMENT - BRAZIL
Source: MLA Industry Insights – Brazil – Feb 2016
Cattle Prices Brazil and Australia (USD terms) Cattle Slaughter and Beef Production
CURRENT MARKET ENVIRONMENT - INDIA
Source: MLA Industry Insights – Market Snapshot – India – May 2015
Projected Composition of Indian Bovine Meat
Production Indian Carabeef Exports
BEEF MARKETS
23 Source: MLA
Beef Consumption Growth Index for the Asian Region & OECD
70.0
80.0
90.0
100.0
110.0
120.0
130.0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15f 16f 17f 18f 19f 20f 21f 22f 23f 24f
OECD Countries Bangladesh China Indonesia Malaysia Philippines Thailand Vietnam
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