Global beef demand shifting, but not growing

OTTAWA — The world may be hungry for beef, but supplies have remained unchanged for 10 years.

“Beef has done something that no other commodity has done,” said market analyst Brett Stuart of Global AgriTrends.

Production peaked in 2007-08 and there has been no real growth for the last 10 years, he told the Canadian Meat Council annual meeting held in Ottawa June 5-7.

Nevertheless, trade is active.

Canada, the United States, Australia, Brazil and India are anxious to do business with Asian countries such as Japan and China, where there is a growing taste for meat and an ability to pay.

Beef supplies are likely to remain stable. The U.S. is expanding by about four percent a year, but that is unlikely to make a major difference in global statistics because Brazil is only showing a slight increase in growth while Australian and Canadian supplies are tight.

The U.S., Australia and Canada are active in Japan, where about 45 percent of imported beef comes from the U.S., 45 percent from Australia and a smaller amount from Canada.

U.S. beef is currently out-competing Australia in Japan because of the latter’s tight inventory and high prices relative to American product. However, that could be temporary as Australia rebuilds. It also pays lower duties than the U.S., which gives it a distinct advantage.

Japan remains a lucrative market, but global beef demand has shifted.

China gave access to Australia in 2011 and has since allowed other countries to supply its surging taste for beef.

China-Hong Kong is the biggest importer of beef in the world, but it is a diverse market with twists and turns.

“It is about a $2.5 billion beef market,” said Stuart.

“However, if we include all of India’s water buffalo that are going to Vietnam into China and we include all the Hong Kong beef that we know is going into China, it is really a $6.5 billion market.”

Japan is a $3.8 billion market by comparison.

Half the beef going to Hong Kong is from Brazil.

Canadian exports to China did well for a year and then dropped off after 2015. Duties are high at 25 percent, which works out to about US$38,000 on a container of beef.

The U.S. hopes to return to China, but Stuart questions whether it is a worthwhile venture.

“We get deals with China, but there are always pending technical details,” he said.

U.S. officials are finalizing technical details, but no trade has happened. China agreed to accept frozen beef from cattle younger than 30 months and some offal products.

However, the Chinese have zero tolerance for beta agonist residues or beef containing synthetic growth hormones. They also want traceability, but less than five percent of American cattle qualify.

“All of that is mostly irrelevant because I am not sure this will be commercially viable,” he said.

Beef prices are also variable in China.

The average price of beef exported to China is $4 a pound. The markup is incredible with short ribs retailing at $24 a lb. and rib eye for $30 a lb. Australian Wagyu is available for about $100 a lb.

The average Chinese eats about 10 lb. of beef a year, and most is consumed in restaurants.

Lower priced beef is also coming in from India and Brazil.

India is the world’s largest beef exporter, but the Hindu government recently banned all slaughter of bovine animals nation-wide, including cattle and water buffalo, as part of an anti-animal cruelty law. A court overturned the ban June 4, but the issue is divisive.

Hindus consider cows to be holy.

Members of India’s Muslim population of 170 million made a good living processing dairy bull calves and exporting the meat.

That group is protesting the ban, but Stuart said it is possible India may not be slaughtering cattle or buffalo a month from now, effectively removing it from the world market.

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