Australian beef exports up for first time in two years

Australian beef exports are up year-on-year for the first time in 24 months, with more growth expected after Japan hit the US, Australia’s biggest competitor, with a hefty tax hike. 

Beef sales hit 93,000 tonnes shipped weight (swt) last month, a volume rise of 9% compared to July 2016, according to Meat & Livestock Australia (MLA).

While the rise is still significantly behind previous levels, and year-to-date Australian beef exports are still down 8%, an uplift in trade, driven by Japan, is fuelling the Aussie appetite for growth in its grain-fed beef trade.

Japan is Australia’s largest market for grain-fed beef. Last month, its imports of Australian beef increased by 12% year-on-year to 27,000 swt. “High domestic wagyu prices and excellent seasonal conditions” supported demand for imported beef and next few months look positive too, according to the MLA.

No tax break for the US

Japan hit countries, including the US, with a 50% tariff on frozen beef exports last month. This tax hike came after Japan imported a large enough amount of beef this year to trigger a safeguard mechanism, designed to protect local producers by raising the amount it costs to export frozen beef to the country.

The US is Australia’s largest competitor in Japan, but its tariff on frozen beef has jumped from 38.5% to 50%, which will stay in force until March 2018. This gives Australia an eight-month window to capitalise on dented American competitiveness. This is because Australia, unlike the US, will not be hit with the tariff hike; it is sheltered under the Japan Australia Economic Partnership Agreement (JAEPA), a free trade deal that came into effect in 2015.

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Grass-fed Australian beef is proving to be a popular hit in China (Bartosz Luczak/Getty Images/iStockphoto)

Exports fall to Europe

While Australia and the US battle it out for market share in Japan, the latter imported 23,000 swt of beef in July – up 19% year-on-year. This came despite America ramping up beef production and a stronger Australian dollar, making its products more expensive.

Demand for grass-fed beef in China helped drive a 10% year-on-year increase to just under 9,000 swt, although Australia is still struggling to compete with cheaper Brazilian beef in the market.

Exports of Australian beef to Canada, the EU and Taiwan dropped 18%, 2% and 6% respectively.