Chief economist at MLA Tim McRae said that reduced cow slaughter and solid cattle prices have underpinned herd rebuilding activities in recent years and demand is the main challenge facing the Australian industry. McRae said: “While exports of beef and veal in 2012 are forecast to increase 1% to 960,000 tonnes (t), returns have been subdued in many markets, accentuated by the high A$ and problems in major world economies.”
The outlook on meat demand, according to MLA, is still centred on the economic conditions in established markets, which are facing continuous strain.
Exports to Japan and Korea are also shown to be down for the first half of 2012, from additional products entering the market and lower consumer demand, which resulted in a 13% drop. However, the report showed that the US market has rebounded this year with exports up 46% for the first half of the year, with nearly 120,000t exported already and a predicted 250,000t of exports expected by the end of the year.
Currently, according to MLA, the problems in the developed markets are outweighing the benefits experienced in the emerging markets and the tight global supply of beef. McRae said: “Increasing demand from the growing middle class in developing economies across the globe remains a positive for Australian beef. This is being offset, however, by continued tough economic conditions and weak consumer sentiment in our developed markets — Japan and Korea.”
“Beef is currently at a price point in many markets that makes it difficult to compete with cheaper proteins, at a time when consumers are price conscious.”
Exports to Russia have been reduced to 55,000t and Indonesian exports have also been cut back. MLA did, however, say that a sustained demand in protein from Taiwan and the Middle East, along with improvement in access for Australian grain-fed beef to the EU, will increase shipments in the second half of 2012 and into 2013.
MLA forecasts live cattle exports at 570,000 heads this year, which they said is 16% lower than 2011 and 55% of exports in 2012 will be to Indonesia.
The update takes into account tight cattle supplies faced by the country and looks at the tough economic conditions in the export market, which MLA said continues to put pressure on demand.
