Consumers losing taste for beef

by Editor fleischwirtschaft.com
Tuesday, July 24, 2012

Australian beef producers are in supply overdrive but it appears consumers worldwide are shrinking away from beef and lamb.

New projections released by Meat and Livestock Australia reveal producers are still on target with herd rebuilding on the back of recent wet years which should see greater numbers turned off through to 2015.

The other side of the equation is lacklustre demand at home and abroad for Australian beef, although MLA chief economist Tim McCrae insists the fading preference for higher priced grilling cuts that's driving more consumers towards lower priced chicken and pork is alarming.

Heading the list of worries for exporters are the markets of Japan and Korea where robust competition from the US and declining consumer demand is combining to create problems for Australian exporters.

Lowest start since 2003

For January to June, Australian beef exports to Japan contracted 10% year-on-year, totalling 150,868 t shipped weight (swt),which is the lowest start to a calendar year since 2003. After an initial forecast of a 15% decline in 2012, Australia's beef and veal shipments to Korea are now anticipated to total 105,000 t (swt) for the current year, which is a 28% decline on 2011's near-record 146,347 t (swt).

While Australian beef is performing stronger in emerging markets such as the Middle East, McRae said the economic problems in the developed markets currently outweigh any benefits from increased shipments to the newer customers.

Exports to Russia for 2012 have been revised back to 55,000 t, along with lower expectations for volumes to Indonesia. Mr McRae said sustained demand from Taiwan and the Middle East, along with an improvement in access for Australian grainfed beef to the EU would assist shipments in the second half of 2012 and into 2013.

Symptomatic of the slower economic activity, especially at retail, the amount of beef destined for the Australian market for 2012 is unchanged on the previous forecast, at 740,000 tonnes carcase weight - up slightly on 2011 due largely to increased production.

Forecast for herds close to the record

The forecast for live cattle exports remains unchanged at 570,000 head, 16% lower than 2011, with 283,000 head or 55% shipped to Indonesia. The drought hit US market has generated a staggering 46% jump in Australian beef exports for the first half of 2012, to 118,120 t shipped weight, with total shipments for the year forecast to reach 250,000 t.

However, the majority of the growth has been in manufacturing beef, with the higher prices in the US attracting shipments away from other markets such as Russia and Japan.
As forecast in January, Australia's cattle herd is expected to continue expanding through to 2015, but at diminishing rates and is levelling out at around 31.5 mill. head (close to the 1976 record of 31.8 mill.).
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