Exports of Australian beef to Russia totalled 32,162 tonnes swt in 2012, down 41% on 2011 figures. Analysts said that “a significant depreciation in the Brazilian exchange rate, cheap product coming out of Paraguay, and resurgence in Australian manufacturing beef exports to the US” were to blame for the slowdown, which comes after two strong years of beef exports to Russia.
The volume losses were driven by frozen beef, which accounted for 91% of Australian beef shipments to Russia last year. “The vast majority of beef shipments to Russia are frozen (97% in 2012); with Australian beef largely used for further processing. This beef competes with South American product directly, with importers very price-sensitive, leaving Australian product exposed to any price decreases from South American suppliers,” said the MLA.
In contrast, exports of chilled beef actually increased 9% year-on-year. “High-quality chilled beef, mostly going into high-end steakhouses, has largely avoided the competitiveness issues associated with frozen beef,” said the MLA, pointing out that Australia’s biggest competitor on chilled beef in the Russian market was the US.
Looking forward, analysts said that Russia’s recent succession to the World Trade Organization should improve market access for Australian beef. Additionally, Australia’s quota for chilled beef exports to Russia is set to increase from 30,000 tonnes to 40,000 tonnes this year, reducing tariffs for exporters.
EU grain-fed growth
While Australian beef exports to Russia slowed down last year, there was significant growth in exports to the EU. Australia exported a total of 14,949 tonnes swt of beef to the EU in 2012, up 16% on 2011 and the highest level since 1998.
The MLA said this growth was “largely a result of increased usage of the recently expanded EU grain-fed beef quota”. The quota was expanded from 20,000 tonnes to 48,200 tonnes in mid-2012, driving a 48% year-on-year increase in Australian grain-fed beef shipments to the EU. Grass-fed beef also increased slightly, with exports up 1% to 8,686 tonnes swt.