Rachel Galvin passes out bumper stickers proclaiming, “I love Australian beef” to visitors at the Cattle Council of Australia office in Canberra.
Similar to stickers Canadian ranchers spread from sea to sea to promote beef after BSE broke out, the saucy imitations are another way Australia is determined to maintain its hold on international beef sales.
“We stole the idea after the Canadians gave us their stickers,” Galvin said with a smile.
An advertising gimmick is not all Australia took from Canada.
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Bean prices have been slumping and the outlook is for more of the same.
It has become Japan’s primary beef supplier in the last three years, exporting 126,500 tonnes in the first four months of 2007, up 1.5 percent from the same period in 2006 and close behind the record set in 2005. Australia forecasts it will export 300,000 tonnes of beef to Japan this year.
Ironically, it could not meet South Korea’s demands, where the population eats more beef than the Japanese, even though it is an expensive item on the menu.
“We can’t ship as much as they want and there aren’t many other countries who have been there,” said Tim Sheldrake, an analyst with Meat and Livestock Australia.
MLA speculates it could lose 25 percent of the South Korean trade due to an expanding Korean cattle herd and the return of U.S. beef this spring.
Japan is the primary target for beef exporting nations keen to capture the higher price the Japanese are willing to pay for all beef products from strip loins to tongue.
As major players in the meat export game, the Australians are enthusiastic competitors who appreciate they are not immune from a trade-halting catastrophe.
“We see ourselves very much like the Canadian market in terms of what would happen if the bottom ever went out here with BSE for instance,” said Allan Bloxson of MLA.
“We would be exactly the same as Canada. We can’t consume it domestically. There is just too much beef and not enough people,” he said from the MLA office in downtown Sydney.
Australians eat 36 kilograms per capita of beef per year, but with a population of only 20 million they cannot chew through all the production derived from 28 million cattle.
Therefore, more than 65 percent of Australian beef production is exported, as meat or on the hoof, to more than 100 countries. Beef export value is the equivalent of about $4 billion Cdn. and live exports are worth $363 million.
Australia’s first major beef sales were directed to Great Britain as part of a post Second World War agreement. When that ended in the early 1960s, Australia focused on Japan and the U.S. As Japan lowered tariffs on agricultural trade starting in 1991, Australia was poised with a marketing approach that differed from the U.S. and Canada.
North Americans tended to view Asia as a residual market to absorb offal products not in demand at home. Australians were keen to sell Asians anything and everything from prime cuts to tongue, tripe, bones, lungs and other offal.
They decided the customer is always right.
“If they want a small carcass size, they get a small carcass. We’ll change the colour, we’ll change the size just to capture any market we can,” Bloxson said.
Richard Rains is even more direct.
“If the customer wants a pink ribbon around the box, I’ll give it to him,” said Rains, chief executive officer of the export company, Sanger Australia. It sells traditional and organic beef and lamb around the world.
The real challenge for all exporters is the shrinking meat pie, said Rains.BSE and its connection to the human form, Creutzfeldt-Jakob Disease, shook consumer confidence in beef in northern Asia and the European Union. Beef consumption in Japan has dropped by 360,000 tonnes since 2001 when it reported its first BSE case.More beef could be sold if confidence returned.
“Australia’s share has grown, but that pie has shrunk dramatically,” Rains said.
“I’d like that pie back to what it was before, or even bigger. More consumption is good for everybody,” he said.
Tim Kelf agreed.
MLA’s regional manager of southeast Asia and China exports watches beef compete against everything from chicken to Indian water buffalo.
Australia prefers to pursue the higher valued, chilled beef sector, but quality is interpreted differently throughout the world. Value is a subjective thing from country to country.
“If somebody pays the money, we’ll sell anything anywhere,” Kelf said.
Customer service is linked to building personal relationships. MLA has fully staffed offices throughout northern Asia as well as Washington, D.C., Brussels, Brunei, the Philippines, Malaysia and Hong Kong.
“The presence on the ground is fundamental,” said Kelf.
Back at home, MLA wants producers to understand the minutiae of the international beef trade and what exporters want from them.
Often producers think they are raising cattle for Japan but that is not the case. Japan wants only particular cuts. The rest of the carcass has to go somewhere else.
“You could break a carcass up into 20 different markets,” Kelf said.
A diversified sales portfolio reduces risk.
The U.S. is another important customer in the mix. About one third of Australian exports are used for further processing. Australia’s biggest competitors in the U.S. are Uruguay and Canada. Once the U.S. resumes trade in Canadian beef from cattle older than 30 months, some of Australia’s business may dry up.
Other good customers are closer to home. In 1986 Singapore butchers requested fresh beef sides they could cut and place on store shelves within a couple days of landing at the airport. Australia agreed to see what it could do.
“One day they had no beef and the next day they had 40,000 tonnes,” Kelf said.
Australia also has built a sound live trade where feeder cattle with a Brahman breed base from the northern tropical regions of the continent are shipped to feedlots in Indonesia.
In 2006, 380,000 head were exported by sea. The animals are about 18 months of age and are fed byproducts from the palm kernel industry.
“They aren’t looking for marbled product. They just want to grow them out,” Kelf said.
For the last 10 years or so, Australia has shipped about 12,000 young bulls to Israel for kosher markets. Other cattle are shipped to Africa.
This year, Australia plans to export 660,000 head mostly from its northern regions.
Two other red meat markets under MLA’s wing have gained strength.
Last year, nearly half of Australia’s lamb and sheep meat production, 143,000 tonnes, was exported. Most went to the U.S. and northern Asia.
Australia is the world’s largest goat meat exporter, selling 20,000 tonnes last year. Most of the meat is derived from feral animals and carcasses are shipped to the Caribbean, Taiwan and U.S. Hispanic markets.
