Chinas doors open to chilled Argentinian beef
CHINA’S decision to open its doors to chilled beef from Argentina has brought to the fore the extreme competitive price pressure Australian red meat exporters are carrying.
Urgent action is needed on energy and labour costs and regulatory burden to offset the paper thin margins Australian processors are currently operating under, exporters say.
A bilateral agreement between China and Argentina has just been signed which includes a new sanitary protocol expanding Argentinian access from the current frozen boneless beef to include bone-in and chilled product.
Australia has dominated the lucrative chilled beef market in China, indeed negotiating expanded access in a landmark deal last year.
Just how quickly the Argentinian deal will kick in is not yet known but international reports say sheepmeat is also included.
Argentina, one of the top 10 largest beef exporters, has already had a strong presence in China, sending more than 80,000 tonnes of mostly low-cost cut frozen product last year.
The Australian Meat Industry Council (AMIC) says Australia is well-placed to compete given the quality of our beef, the longstanding relationships forged and our ability to supply year-round.
However, the lack of progress in areas that desperately need reform could mean developments such as this affect Australian beef fortunes significantly.
“It’s not about saying here comes Argentina, it’s about looking at how we compete,” said AMIC chief executive officer Patrick Hutchinson.
“Like us, Argentina has a good track record in China and is working hard on quality.
“Unlike us, they don’t have the cost pressures.”
Northern NSW’s Bindaree Beef, which has pioneered the sale of chilled retail-ready beef into the Chinese market via an online platform, says it is watching the China market very carefully.
“Brazil has taken a strong foothold into Hong Kong and China with frozen product and we are concerned about Argentina competing in the chilled segment,” Bindaree’s Andrew McDonald said.
Meat and Livestock Australia’s latest market snapshot on China says it is already very competitive and will become increasingly so as more countries are granted access.
Australia’s key competitor for frozen beef into China has been Brazil, which re-gained access in 2015, and within one year had supplied almost 30 per cent of imported frozen beef.
The United States also regained access to China last year. MLA said Uruguay has been a significant beef supplier to China, with New Zealand and Argentina also listed as suppliers of note.