The Muster l TRADE
Beef exports take a licking, but keep on ticking With international borders closed, America’s hospitality industry flailing, and China imposing beef bans, what does the future hold for cattle farmers? Words IAN LLOYD NEUBAUER
A
s the world's largest exporter in dollar terms, traders predicted consumption of Australian beef overseas would see a big decline because of COVID-19 market and logistics disruptions – predictions that gave beef farmers in NSW still reeling from the worst droughts and bushfires in living memory another reason to lose sleep. “About 70 per cent of Australian beef is sold overseas so the ability to maintain market access is absolutely vital to the industry and all the industries that depend on it,” says Warwick Powell, an adjunct professor and economist at the Queensland University of Technology. But the fall has been softer than projected, with data for April showing only a 2 per cent drop in beef exports compared to the previous month March when the World Health Organisation declared COVID-19 a global pandemic.
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THE FARMER
JULY - AUG 2020
“Currently the pandemic has not had a big effect on farmers in NSW because with most parts of the state transitioning out of the drought, people are withholding stock to build herds up again. That's caused a bit of a shortfall and kept prices high,” says Derek Schoen, a grazier in Corowa on the NSW/VIC border who chairs of the NSW Farmers cattle committee. “It's not exactly business as usual – inputs like parts for tractors are hard to get and new tractors are almost impossible to get hold of,” Schoen says. “But there is lots of optimism for the season ahead, especially here in the south of the state where we farmers no longer have to buy fodder and are fuel prices are at historic lows.” A report by financial consultancy Deloitte confirms Australian agribusiness has“benefited from reduced competition” for inputs like crude oil that is trading at
50 per cent or less of its historical value; as well as “stark depreciation of the exchange rate. “Compared to the start of the year, the Australian dollar is around 10 cents lower than the US dollar,” the report notes, adding optimism was further buoyed by the fact “that people still need to eat”. But people in target markets like China are changing the kind of beef they eat – and where they eat it. “It is obviously a concern is that Australian beef is generally more expensive,” says Andrew Cox, MLA's general manager of international markets. “During the lockdowns, discretionary spending has been down, events, weddings and banquets have been cancelled and restaurants have been closed,” Cox says. “So a lot of businesses that buy Australian beef are struggling because they're not pulling through our
