The Australian red meat and livestock sectors will benefit by $11 bn from the elimination of tariffs negotiated under the China-Australia Free Trade Agreement (ChAFTA) announced by Australian Prime Minister Tony Abbott following his meeting with Chinese President Xi Jinping in Canberra on 17 November.
Under the Agreement, the tariffs currently levied on Australian beef of 12–25% will be eliminated over 9 years; sheepmeat and goat meat tariffs of between 15–23% will be eliminated over 8 years; the tariffs on offals of 12–25% will be eliminated over 4-10 years; the 5-14% tariffs on hides and skins will be eliminated over 4–8 years; and the 10% tariffs on live cattle and live sheep eliminated over 4 years.
Once fully implemented an FTA with China has the potential to boost the gross value of beef production by $270 mill. annually by 2024. Out to 2030, the total benefits for beef will approach $3.3 bn.
For the sheepmeat sector, the potential benefits are more than $150 mill. each year by 2024 – with the value over the next 16 years being in excess of $1.8 bn.
As China is a destination for nearly 90% of Australia’s sheepskin exports and 80% of cattle hides, elimination of these tariffs, as well as those on offal, will add $436 mill. a year by 2024 across both beef and sheepmeat – and out to 2030, these benefits could total $6 bn.
“These ChAFTA benefits will add significant value to the Australian red meat and livestock industry and complement the gains derived from the other FTAs Australia has concluded to date,” Chairman of the Australian Red Meat ChAFTA Taskforce David Larkin said.
“The current tariffs imposed on Australian beef, sheepmeat and co-products exported to China represent an annual tax on the supply chain of around $826 million. The gradual removal of this cost burden will positively impact the profitability of Australian cattle and sheep producers, processors and exporters, not to mention alleviation of the inflated prices paid for Australian red meat and associated products by Chinese customers and consumers."
In 2013, 154,833 t of beef; 97,423 t of sheepmeat; 4,736 t of goat meat; 8,044 t of offal; 66,530 head of live cattle (predominantly dairy cows) and 3,472 live sheep were shipped from Australia to mainland China – representing an export return of $1.3 bn. China is also a significant market for co-products with the combined value of offal, hide, sheepskin, tallow, meat & bone meal and pet food exports worth over $1 bn.