Outlook for the Australian beef industry Phillip Island August 2009 JOHN WYLD, Board Member Meat & Livestock Australia
Jan 13, 2016
Outlook for the Australian beef industryPhillip Island August 2009
JOHN WYLD, Board MemberMeat & Livestock Australia
Box Plains – Tarwin Lower
Young Koolomurt Bulls
Address outline
• The short term challenge – the global economic crisis
• Medium to longer term market prospects
• Longer term industry issues / challenges
•Tighter Credit Availability
•Currency Turmoil
•Economic Recession– Trade Disruption– Demand Downturn
CREDIT CRISIS
Impact of the GCC on the beef trade
• De-pipelining in all markets – minimise stocks to minimise credit & exposure
• Shaken up the trade as line of credit tougher, & importers caught with dear product
– some importers will not survive
• Russia buying ceased for a while
• Korean buying low– not helped by stocks of cheap US beef
Consumer sentiment plunges globally
2004 2005 2006 2007 2008 200980
90
100
110
120
130
140
Roy MorganConsumer Confidence Rating
97 99 01 03 05 07 090
50
100
150
Conference BoardConsumer Confidence Index
United States Australia
Impacts of the GCC on the meat consumer
• Overall fall in expenditure on food and meat
• Shift from dearer foods to cheaper foods– eg. from beef to poultry
• Less eating out & more at home– Fall in food service sales– Rise in retail sales
• Shift from dearer foodservice to cheaper food service– From middle to upper level restaurants– To fast food
• At retail, shift from steaks to sausages & mince
Importantly – it is happening everywhere at the same time!
Lack of creditDe-stocking
US returndrought dairy cow kills
US demand 8%
Strong Middle East & Asia
demandlow global supply
2009
cattle price
▼2%
2009
lamb price
▲21%
GFC positive for lamb, but not beef. Why?Its a matter of supply and demand balance
Medium to longer term prospects
Remember the global food price inflation crisis of 2007/08?
Venezuela
Argentine
Africa
Indonesia
Mexico
Remember the global food price inflation crisis of 2007/08?
Venezuela
Argentine
Africa
Indonesia
Mexico
The current global turmoil only gives the world a short respite from these pressures
Driven by the industrialisation of the population hubs of China & India
shortage of agricultural land & need for more land for grain production – for ethanol & food
Meat consumption is driven by two basic factors - income …. and population
1950 1970 1990 2010 2030 20500
2
4
6
8
10billions
Growth in world population
1980 2000 20160
20
40
60
80US$ (trillions)
Growth in world GDP
Current crisis
Projected beef import growth 2008 to 2018: FAPRI
EUChi
na CIS
Japa
n
Indo
nesia
Mex
ico
Philip
pine
s
Korea
othe
r0
100
200
300
400
500'000 tonnes cwt
Longer Term Challenges:
CompetitionNutritional IssuesAnimal WelfareMarket AccessEnvironment – Climate Change
Competitive challenges
Brazil & other beef exporters will compete fiercely with Australia to exploit available opportunities
2000 2005 2010 20180
500
1000
1500
2000
2500
3000'000 tonnes cw
2000 2005 2010 20180
2
4
6
8
10
12million tonnes cw
Growth in Brazil beef production Growth in Brazil beef exports
Nutritional issues
2000 2004 20080
1
2
3
4
% of US population claimingto be vegetarian
Vegetarianism on the rise?
Animal welfare
Animal activists/welfare
• Increased pressure from animal activist/welfare groups:– sophisticated and well funded campaigns
Online Community networks/events/youth groups
– Influencing community support and perceptions of the trade– Petitons/letter writing campaigns to Government
Market access
Every Market we service has barriers
E.g. Japan 38.5% import duty
EU 7,500 tonne quota plus 20% duty
80% over quota
WTO Doha Round
- On ‘life-support’ - cautious optimism to outright pessimism
- No appetite by some of the 153 members for trade reform
- The likely outcome…..
• Lower ambition
than sought
Free trade agreements
The World does have an appetite for FTAs (400+)
Environment
Australian greenhouse gas emissions• Agriculture’s contribution to national emissions
Cattle are far more polluting under Kyoto protocol methodologies than other types of livestock
Grasscattle
Pigs Poultry0
5
10
15
20
25
Tonnes CO2-e per tonne of production
Impact of CPRS on the beef industry with agriculture included
Beef Pork Poultry
0
-5
-10
-15
-20
-25
-30
-35
% change in gross value of production
2020
2030
Grass Grain
0
-5
-10
-15
-20
-25
-30
-35
% change in gross value of production
2020
2030
Beef industry attracting unfavourable publicity generally over the environment
Favourable future, Australian industry well positioned
• Beef consumption & trade expected to grow
• Australia is one of the world’s most efficient suppliers of grassfed & grain-finished beef
• Good product quality & rising – Meat Standards Australia/Eating Quality Assured
• Top disease freedom
• Safe meat & product integrity– LPA, supply chain QA, NLIS
• We ignore the challenges we face at our peril
• But MLA & Industry well aware and working hard
Thank you