SYDNEY, July 20 — Australia said today it has sealed a deal to become the first country to export live cattle for slaughter to China, with the trade likely to be worth as much as A$2 billion (RM5.6 billion) annually over the next decade.
A deal was agreed in principal last year but had been held up by Chinese concerns over the potential risk from the insect-borne Bluetongue virus to its sheep flock.
But after months of talks, rules to minimise the risk of the disease had been agreed, Australia’s Agricultural Minister Barnaby Joyce said.
“Over the past five years we’ve had a significant trade in breeder cattle with China, primarily for dairy heifers. Now, I’m pleased to announce we are a step closer to the commencement in trade in live slaughter and feeder cattle to China,” said Joyce.
Private exporters and importers will need to meet the new rules before trade can start but Joyce told Reuters the deal was likely to see the initial export of between 40,000 and 50,000 cattle to China.
The deal will help ease shortages of red meat in China, analysts said, and could significantly alter the local market if there are no import restrictions.
“If China allows live cattle in a large quantities, it will impact the market a lot,” Pan Chenjun, senior analyst at Rabobank.
“They can fully utilise all parts [of the animal] and not only focus on the local market but could also look into exports. For example, steak prices are a lot higher in Japan than in China,” Pan said.
Chinese meat traders said rapid growth in live exports was unlikely, however, as there are only a limited number of quarantine sites for Australian cattle.
China’s beef consumption is set to grow around 2.2 per cent annually, faster than pork and poultry, according to Rabobank.
By 2025, only 80 per cent of China’s consumption demand will be met by local supplies, down from 85 per cent currently, according to estimates from the bank prior to the deal.
The agreement opens a lucrative market for the world’s fourth-largest beef exporter, which recently saw its top buyer Indonesia slash import quotas by more than 80 per cent.
Australia’s live cattle industry welcomed the deal, saying it would help the industry weather volatile Indonesian demand.
“This ... is a major breakthrough for the Australian livestock export industry and significantly improves the market diversification options,” said Alison Penfold, chief executive of industry body Australian Livestock Exporters’ Council.
Indonesia has recently launched a self-sufficiency drive and slashed third-quarter cattle import quotas to 50,000 from nearly 300,000 for the second quarter. — Reuters
