US beef had been shut out of China for 13 years but Rabobank’s Beef Quarterly report warned while access came with several conditions that required management changes, over time US exporters would be competing for the same consumers as NZ.
“Their target consumers are probably the same target consumers as NZ’s focus, the higher value consumers,” Rabobank animal protein analyst Blake Holgate said.
China required US beef to be fully traceable, have no artificial growth implants or use of hormones and all products had to be tested for ractopamine.
“China has a strict requirement of full traceability for exporters, a major hurdle for the US in regaining direct market access as there is no industry-wide traceability in the US.”
Third-party verification of animal origin and the feed yard used in the US was acceptable to the Chinese.
China was NZ’s second largest beef market with first quarter this year exports rising 28% on to the corresponding quarter last year.
Holgate said a series of scandals derailed the push by Brazilian beef exporters into markets such as the US.
Officials investigated irregularities with meat inspection, prompting import bans, which had since been lifted. Its largest beef processor, JBS, was then caught up in a political scandal.
“What these couple of scandals have done is undermine the confidence of producers and consumers in Brazil,” Holgate said.
Now the US had again suspended Brazilian imports over quality concerns. Holgate said he was still trying to determine the exact reasons for the ban and its implications.
Brazilian cattle prices had fallen on the back of that uncertainty, which was likely to slow production growth on the back of that improved access.
Another issue affecting world beef production was the Indian Government’s ban on the sale of cattle, including buffalo, in notified livestock markets for non-agricultural purposes.
Holgate said that could have an enormous impact on the sale of livestock for slaughter from what was the world’s largest exporter of bovine meat.
Its main markets were the Philippines, Malaysia and Vietnam but Holgate said there was some doubt on how individual states would respond or conform to the national directive.
On the NZ market, strong global demand and tightening domestic supply were expected to support farmgate prices at or above current levels for the 2016-17 season.
Helping underpin that were high US prices on the back of low exports from Australia as that herd recovered from drought.
Prices for lean trimmings, for example, were 12% above the five-year average for this time of the year.
NZ was the largest beef exporter to the US for the first quarter of this year despite volumes to the market being 13% lower.
US production was expected to increase later in the year, which could put pressure on prices.
