NZ aims for a larger share in the Chinese beef market
Rachel Agnew, Senior Agricultural Analyst for Beef + Lamb New Zealand, said higher prices could provide a buffer for farmers and meat exporters facing the challenges of increased global shipping costs and the high New Zealand dollar. Currently, a shortage of beef is predicted in the global market with intense competition between importers.
Despite being the world's largest beef exporter and the main supplier in the Chinese market, Brazil is facing a shortage of cattle. Almost half of all Brazilian beef processing plants are currently temporarily closed – with low domestic demand and recession also a factor. The decline in Brazilian cattle processing was unexpected. US Department of Agriculture (USDA) forecasts for 2021 projected further growth in Brazilian beef production but this is now considered unlikely, as is further export growth.
"Brazil is the world’s biggest beef exporter and China’s demand for beef skyrocketed during 2020. China’s beef imports from Brazil increased 112% year on year. 40% of total Chinese beef imports in 2020 came from Brazil, and the share of Brazilian beef exports destined for China lifted to 62%, up from 38% in 2017. Industry commentators are reporting that meeting the demand from China, which requires beef to be from animals no older than 30 months, resulted in Brazil digging deeply into its capital stock, including many young heifers. That is also evidenced by surging cattle prices in Brazil, which have doubled in the past 18 months," says Rachel Agnew.
Australia, which accounted for 12% of China’s beef imports in 2020 is also still rebuilding its herd following high drought-induced processing rates in 2019 and 2020. At the same time, Argentina, another large beef supplier to China is considering limiting or halting exports for at least a month to ease the inflation in the domestic market. That is why Mrs. Agnew considers New Zealand's position to be perfect to increase its share in the Chinese beef market. "The real opportunity is that our exports will be going to a global market that is short of beef. China is also likely to be in competition with the US for beef imports, and once you get that competition, you get better prices. New Zealand has been impacted by global disruption to shipping, shortage of containers and storage and the high NZ dollar. Shipping costs have almost doubled and the supply chain cannot absorb all the costs so they flow through to exporters while the high NZ dollar also erodes the farm gate price. Higher beef prices would help to balance that out and soften the impact of these obstacles in the market", she added.
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