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Global beef
GLOBAL MARKETS
STRATEGIES
CONSULTATION #1
industry and trade report
This report offers a comprehensive overview of the global beef industry
and Australia’s trade relationship with the world.
Summary
The long-term outlook for global beef consumption is largely positive, underpinned by growth in populations and household wealth
in emerging markets, particularly throughout Asia. Australia produces only 4% of global beef but accounts for around 17% of world
trade, and has consistently been one of the top three global exporters for several decades. While 2020 was a particularly challenging
year, characterised by the far-reaching impact of COVID-19 and tight levels of Australian livestock supply, many opportunities for
targeted growth remain.
Global opportunities for Australian beef Global challenges for Australian beef
• African Swine Fever (ASF) has had a significant impact on • Australian beef production is expected to remain tight in
the global meat market, particularly in growing China’s 2021, as the nation enters a herd rebuild phase following
import demand across all proteins, including beef. a period of elevated drought-induced turn-off in 2018
• Growing household incomes within emerging markets and 2019.
are providing many consumers with the ability to • COVID-19 has created a multitude of challenges that will
increase the volume of their protein consumption, while likely have flow-on effects in the coming years. Key
those shifting into the middle-upper income brackets are issues through 2020 were disruptions to foodservice
typically improving the quality of meat they consume. channels and supply shocks created by logistical and
• In developed markets, consumers are seeking processing barriers, with few countries exempt from the
differentiated segments across the beef category, such impacts of reduced tourism, higher unemployment levels
as certified breeds like Angus or Wagyu, and are and constrained consumer spending.
exploring both grassfed and grainfed beef. • Rising production and export volumes from key
• Expansion and modernisation of foodservice industries competitors, such as the US and Brazil, will continue to
within developing markets. intensify competition in coming years, particularly within
Asian markets.
• Growing consumer interest and awareness of
provenance, sustainability, animal welfare, food safety • The high price of beef compared to competitor proteins,
and traceability provide messaging opportunities for such as chicken and fish, will weigh on category growth
Australian brands and underpin ambitious, industry-wide in economically-constrained markets.
programs for Australia to further differentiate. • There is growing consumer interest in alternative
proteins, with a number of meat substitutes becoming
more embedded in the mainstream marketplace and
competing for market share with beef, albeit off a
low base.
Global population Households earning* >US$35k/year Australia’s share of global exports
Brazil – 22%
Australia – 17%
7.790 8.104 311.4 396.1 US – 12%
India – 12%
Argentina – 8%
billion billion million million NZ – 6%
in 2020 in 2024 in 2020 in 2024 EU – 6%
Canada – 5%
Rest of world – 13%
Source: Fitch Solutions, 2020 estimate, 2024 forecast Source: Fitch Solutions, 2020 estimate, 2024 forecast Source: IHS Markit, 2019-20
*includes: EU, Egypt, Bahrain, Iran, Jordan, Kuwait, Qatar, Saudi Arabia, UAE, US, Canada, Mexico, Japan, Korea, China, Australia, ASEAN, Taiwan and Hong Kong.
Disposable income = earnings after taxes and social security charges.
MLA Global beef industry and trade report February 2021 1
Australian beef exports – volume Australian beef exports – value Australian beef exports – cuts
Manufacturing – 34%
Brisket – 10%
Chilled grain – 14% Blade – 7%
Frozen grain – 13% Frozen – 62% Chuck roll – 6%
Chilled grass – 13% Chilled – 38% Silverside/outside – 6%
Frozen grass – 61% Shin/shank – 4%
Topside/inside – 4%
Other – 30%
Total 1.2 million tonnes swt Total A$11.26 billion
Source: DAWE 2019-20 tonnes swt Source: IHS Markit, 2019-20 Source: DAWE 2019–20
Share of global beef production Global meat consumption – million tonnes
US – 20% 131 137
Brazil – 15% 120
106
EU – 12%
China – 11% 71 73
Argentina – 5%
India – 4%
Australia – 4% 16 16
Mexico – 3%
Rest of world – 26%
Pork Poultry Beef Sheepmeat
2020 2024
Source: OECD-FAO Agricultural Outlook 2020 estimate Source: OECD-FAO Agricultural Outlook 2020 estimate
Major impacts of COVID-19 Economic impacts
COVID-19 has profoundly disrupted global economic growth,
The impact of COVID-19 has been multi-faceted and far-
with few countries immune to the impacts of reduced tourism,
reaching, requiring swift adaptation and flexibility to navigate
higher unemployment levels and constrained consumer
the multitude of challenges. While the majority of global
spending. While the majority of Australia’s top beef markets fell
industries have grappled with the effect of COVID-19, the
into recession in 2020, all of the top 15 markets are forecast for
agriculture sector has adapted and performed well, highlighting
GDP growth in 2021, according to the International Money Fund.
the resilience of the sector.
Global economic growth projections
Trade and logistics
COVID-19 has greatly impacted beef supply chains, with 10
GDP % change (relative to previous year)
8
logistical barriers challenging operations across the world.
6
A combination of spreading COVID-19 cases and social 4
distancing measures have impacted the processing industry, 2
with operational disruptions on production volumes for many 0
suppliers. Trade has been impaired as disruptions have led to -2
port bottlenecks and congestion, slowing the turnaround of -4
refrigerated shipping containers. Air freight has also been -6
impacted, with disruptions to typical flight paths constricting this -8
-10
form of transport and creating additional costs.
Australia
Canada
China
Hong Kong
Indonesia
Iran
Japan
Korea
Kuwait
Malaysia
Philippines
PNG
Qatar
Saudi Arabia
Singapore
Taiwan
Thailand
UAE
UK
US
Foodservice and tourism
The multi-layered impact of COVID-19 has prompted some
significant shifts in consumer purchasing behaviour. The 2020 2021
foodservice sector has been one of the most impacted
Source: IMF, World Economic Outlook Update, October 2020
industries, with wide-scale shutdowns and operating restrictions
across most markets. Operators in the foodservice sector that While global markets continue to face uncertainty from COVID-
pivoted to takeaway or delivery models were able to weather 19’s economic impacts, international demand for Australian red
the COVID-19 storm more successfully. With the reduction in meat remains buoyant. The global ‘mega-trends’ of growth in
international travel, this has also contributed to the slowdown of population and disposable incomes, combined with the
the foodservice industry worldwide. continuing impact of ASF on global pork supply and demand,
underpin a strong opportunity for Australian beef. However,
Retail
there is potential for a long-term rise in protectionism (an
Retail meat sales have performed well off the back of the economic policy of restricting imports from other countries)
decline in foodservice activity, with consumers spending more which could result in a renewed emphasis on food security and
time cooking at home. There has been a growing consumer a focus on increasing local food production.
interest in country of origin, driven by a preference for food
choices promoting nutrition, immunity and overall health.
MLA Global beef industry and trade report February 2021 2GLOBAL CONSUMPTION
Global beef consumption is currently forecast to grow at an Household income growth within developing countries is
average annual rate of 0.6% through to 2024 (OECD-FAO 2020), expected to drive further demand for meat, as increasing
supported by population and income growth, primarily in Asia. disposable incomes open up a range of retail and dining choices
This growth is expected to equate to an additional 1.8 million for consumers. Starting from a lower per capita base,
tonnes of beef being consumed across the globe by 2024. developing countries are forecast to account for 77% of
However, beef’s share of global meat consumption is expected additional world consumption growth over the next five years,
to decline slightly over that period to 21% (down 0.9% relative to largely due to population growth, urbanisation and increasing
2020), particularly due to the rebound of global pork production incomes.
as ASF steadies, the gradual uptake of alternative proteins and
shifting consumer perceptions towards health and sustainability. Number of households earning over US$35,000
Beef consumption levels vary across the world but are often 120
determined by a combination of factors, including: 5%
100
• economic growth and consumer purchasing power
million households
800
• population growth and demographics
• consumer dietary preferences associated with culture and 600
106%
religion 400 27% 19%
• a history of local meat production and consumer familiarity 22%
200 9%
• competition from other proteins and relative prices 23% 192% 46% 26% 82% 139%
0
• trade policies and market access
US
China
Japan
UK
Korea
Australia
Taiwan
Indonesia
Saudi Arabia
UAE
Philippines
Vietnam
• resilience of supply chains
• urbanisation and cold chain development.
Increasingly, consumption in developed markets is also guided 2020 2024f
by health perceptions, environmental considerations and animal
Source: Fitch Solutions
welfare claims. These consumer trends have supported the rise Data labels show percentage growth of 2024 relative to 2020
of the alternative protein industry, which will play a growing role * Disposable income = earnings after taxes and social security charges.
in the protein landscape in the years to come.
Global consumer trends
Beef consumption forecasts Beef has a long history of consumption in many markets around
the world and constitutes a major dietary component in some
30
Mostly developing markets Mostly developed markets countries. Beef encompasses a wide range of products, from
25 low value offal and manufacturing product through to highly
million tonnes cwe
marbled premium Wagyu, all of which play a unique role
20
depending on the country and consumer segment.
15 In many western countries, beef is considered the ‘prime’ meat,
10 viewed as the most superior and delicious, and often
considered a family favourite. However, the role of beef differs in
5 many Asian and Middle Eastern countries, where proteins such
0 as pork (in Asia), seafood, chicken and sheepmeat (in the Middle
Africa Latin America Asia North America Europe Oceania
East) play a larger role in consumer diets.
2020 2023 2026 forecast 2029 forecast A number of trends around the world that favour both grassfed
Source: OECD-FAO 2020 Agricultural Outlook and grainfed beef – as well as other points of difference such as
Middle East and North Africa (MENA) split across Africa and Asia
breed and raising claims – provide Australia’s broad production
system with numerous opportunities to target growing
Global beef prices have been growing at a faster rate than both
segments.
chicken and pork. Relative to an index of 2002-2004 prices,
global beef prices have more than doubled, while poultry and
pork increased just 51% and 19% respectively (FAO meat price For a detailed of overview of MARKET SNAPSHOT l BEEF & SHEEPMEAT
index). This consistent divergence in price, underpinned by Australia’s primary beef markets, visit: Japan
Japan is geographically a small country, with less than one tenth
of the population in China. Yet the market has a high number of
comparatively affluent households and sophisticated supply chain
infrastructure. A balanced diet based on variety, quality and good
flavour is highly important for Japanese consumers, and coupled
with the country’s low food sufficiency rate, Japan is a major importer of various food products from global suppliers, including beef.
substantial efficiency gains in the poultry and, to a lesser extent, mla.com.au/market-snapshots
While the country’s economic growth is subdued compared with many neighbouring markets in Asia, Japanese consumers have a
strong interest in healthy living, and will continue to demand high volumes of quality imported proteins, such as Australian red meat.
Meat consumption
Population1 Household number by disposable income2 per capita3
US$35,000+ US$75,000+
1,444
24.4 19%
pork industries, has contributed to the share of consumption
0.1%
million 24.2 42%
55
kg
39%
126
674
10.6
3.8
million
5.1 million Grocery spend4
shifting away from beef towards cheaper proteins.
Japan
ASEAN
3.3
Japan
26 1.4
A$
5.9
China
Japan
Australia
ASEAN
Australia
Australia
5,851
ASEAN
China
China
per person/year
124 million by 2024 44% of total households 7% of total households
(-1% from 2021) (52% by 2021) (9% by 2021)
Japan is one of the largest export destinations for Australian beef, alongside the US and China. It is also the
largest market for grainfed beef, taking close to half of total grainfed exports.
Depending on the stage of economic development of the
Australian beef Australian beef Australia’s share of Australian beef
exports – volume5 exports – value6 beef imports7 offal exports6
16% 11%
Chilled grass
Australia
A$283 million
Chilled grain 43% Chilled
33%
Frozen grass 57% Frozen 46% Other
countries
Key outlet:
Frozen grain
country in question, the challenges and opportunities across
40%
(table-top BBQ)
Total 284,023 tonnes swt Total A$2.42 billion
Japan is a consistent buyer of Australian sheepmeat and is the largest chilled lamb customer in Asia. In 2019–20,
total sheepmeat fell 3% on year-ago levels, largely due to a decrease in supply.
Australian sheepmeat Australian sheepmeat Australia’s share of Major outlet of Australian
consumer profiles differ. For instance, demand in many mature
exports – volume5 exports – value6 sheepmeat imports7 sheepmeat 8
42% Chilled lamb 28% (Sheepmeat BBQ)
Australia
64%
29% Frozen lamb Lamb
Chilled mutton Mutton Other
countries
in Hokkaido
Frozen mutton (Northern island
72% of Japan)
1% 28%
markets is shifting focus from quantity to quality, as many
Total 13,793 tonnes swt Total A$164 million
1 2
Data source for charts: Fitch Solutions 2021, ASEAN = Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam, Fitch Solutions 2021 (disposable income =
3
earnings after taxes and social security charges), ASEAN = Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam, Fitch Solutions, GIRA (per person per year in
4
cwt excluding fish/seafood) 2020 and 2021, IGD 2021 (defined as the total annual grocery retail market turnover in a given year, divided by the population for the same year. Grocery retail market data
5 6 7 8
excludes VAT/sales tax), DAWE (FY 2019–20), ABS/IHS Markit (FY 2019–20), IHS Markit (most recent 12 months due to data availability), MLA
MLA MARKET SNAPSHOT BEEF AND SHEEPMEAT JAPAN September 2020 1
high-income countries are reaching saturation levels of per
capita meat consumption and consumer preferences leading to
a diversification of protein sources. Differentiation is a key factor
which will become increasingly important for consumers in
developed markets, as they seek flavour and experience over
volume.
MLA Global beef industry and trade report February 2021 3World meat price indices Global meat consumption: developed economies
300 250
250 200
index (2002–04=100)
million tonnes cwe
200 150
150 100
100 50
50 0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Beef Pork Poultry Sheepmeat
Beef Sheepmeat Pork Poultry
Source: OECD-FAO 2020 Agricultural Outlook
Source: FAO
There are several broad trends affecting beef consumption Global meat consumption: developing economies
globally in both foodservice and retail channels, with growth in
250
consumer demand for:
• fresher and less processed offerings 200
million tonnes cwe
• more customised meals
150
• more international cuisines
• messaging relating to provenance and health (e.g. ‘grassfed’, 100
‘free from’, ‘natural’)
50
• growth of e-commerce and different delivery methods
• more convenient, on-the-go offerings 0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
• smaller but higher quality premium portions.
Consumer perceptions of beef and competing proteins can also Beef Pork Poultry Sheepmeat
vary significantly from market to market. For instance, the
Source: OECD-FAO 2020 Agricultural Outlook
economic development of a country influences typical
consumer purchasing drivers, with developing countries
focusing more on freshness and safety, while developed Major global markets
markets focus on value and points of difference. Given the
diversity of Australian beef, understanding consumer needs and United States
what drives purchasing decisions in each market is essential.
Globally, the US has the highest number of households earning
Key motivators to purchase beef disposable incomes over US$35,000 and US$75,000 per year.
This affluent consumer base, combined with high per capita
Japan Safety Freshness Value beef consumption, means the country remains highly attractive
and influential in the global protein trade landscape.
Korea Safety Natural Freshness Opportunities exist for Australian red meat to enhance its profile
Saudi Arabia Halal Safety Natural in the US thanks to growing demand from consumers for natural,
healthy and environmentally sustainable products.
China Safety Natural Freshness
The US is one of the largest global consumers of animal
United States Freshness Natural Value proteins, with the level of meat consumption near maturity.
Going forward, the opportunity for growth within the beef
Indonesia Halal Freshness Safety category will be to increase export value through premium
Malaysia Halal Safety Freshness products like chilled grassfed beef, rather than through
increased volume of conventional beef exports.
Source: MLA Global Consumer Tracker
China
The popularity of meat alternatives is growing and research China has transformed from being a minor import market in
indicates that as protein demand evolves in the future, 2010 to the world’s largest imported beef market in 2020, with
traditional growth drivers may become more contemporary, growth accelerated by the spread of ASF and the subsequent
such as dietary shifts for health and ethical reasons, government decline in pork production. However, China’s beef import
regulations, environmental constraints and technological expansion was underway well before the onset of ASF. It is
advances. While traditional meat will dominate the protein mix expected that population and income growth across the country
for decades ahead, a growing proportion of the global protein will continue to drive importation growth in the long‑term.
shortfall is expected to be offset by emerging plant-based
Chinese consumers consider beef a superior protein, making it
alternatives, lab grown proteins and expanding aquaculture
a family favourite due to its high nutritional value and great
production.
taste. Barriers to more frequent consumption, apart from price,
are driven by perceptions that beef is more difficult to prepare,
less fresh and less tender compared to other proteins. In urban
upper middle-class households, there is increasing exposure to
western-style steaks, sausages, pasta dishes and burgers, both
at home and via foodservice.
MLA Global beef industry and trade report February 2021 4Annual beef consumption per capita developed in the world in size and sophistication, with a diverse
range of global cuisines and price points available to
30
consumers.
25
kg/person (retail weight)
South-East Asia
20
This dynamic and fast-growing region is diverse in population
15 size, economic status and cultural/ethnic background. Improving
household incomes and changing consumer tastes in the region
10
are driving a rapid rise in red meat consumption, particularly in
5 urban cities. South-East Asian consumers associate beef with
superiority and good taste, which typically drive them to pay a
0
premium for it. Consumers also have positive perceptions of
US
Australia
Canada
Korea
UK
EU
Vietnam
Japan
Malaysia
China
Saudi Arabia
Philippines
Indonesia
imported beef products, with ‘premium quality’ and ‘better taste’
being commonly perceived benefits.
MENA (Middle East and North Africa)
Source: OECD-FAO 2020
MENA is a large, complex region with many varied consumer
markets. MENA consumers have traditionally preferred leaner
Japan meat. However, consumption and spending on beef is forecast
to increase across almost all MENA markets in the next several
A balanced diet based on variety, quality and good flavour is
years as more affluent consumers come to appreciate the
very important for Japanese consumers, and coupled with the
benefits of premium quality beef, combined with ongoing
country’s low food sufficiency rate, Japan is a major importer of
urbanisation and westernisation. The region has a comparatively
various food products from global suppliers, including beef. young population – all MENA-10 countries, except Kuwait, have
While the country’s economic growth is subdued compared with over half of their population aged under 35 years.
many neighbouring markets in Asia, Japanese consumers have
a strong interest in healthy living, and will continue to demand
high volumes of quality imported proteins. Despite flat
population growth, beef consumption is projected to increase in For the latest outlook on Australian
Japan due to growing per capita consumption. export markets, visit: mla.com.au/
prices-markets/overseas-markets/
Beef is considered the most premium protein with good taste,
underpinned by a strong emotional connection and a unique
flavour experience. Japan’s restaurant sector is one of the most
GLOBAL SUPPLY
Global beef production was estimated to have fallen by 2% in 2020, largely due to the contraction of Australian beef supplies and the
impact of COVID-19 on the Indian meat processing industry. In 2021, the United States Department of Agriculture (USDA) has forecast
global production volumes to lift to 61.5 million tonnes carcase weight equivalent (cwe), an increase of 2% on 2020 levels. Economic
recovery across the globe is expected to support the growth of beef production, particularly for those nations that have suffered
from disruptions caused by COVID-19.
Global beef production
0–499 500–999 1,000–1,499 1,500–1,999 2,000–2,499 2,500–2,999 3,000–3,499 3,500–3,999 4,000+
Source: USDA, 2020 volumes, thousand tonnes cwe
The types of production systems and supply chains vary greatly around the world. Beef production in NZ, the EU and India is mainly
a by-product of large dairy industries. However, at one extreme, New Zealand is almost entirely export focused, while the EU is
domestically oriented.
MLA Global beef industry and trade report February 2021 5Production mix
100 Australia
China Argentina Uruguay
80 US Mexico Canada
Beef cattle % of cow herd
60 Brazil
40
EU
20
Russia
New Zealand
India
0
0 20 40 60 80 100
Export % share of production
Source: USDA
Bubble size reflects 2020 production
Meanwhile, most producers in North and South America rely on of cattle went through this system in 2019–20, comprising 46%
beef cattle genetics for production, but the former primarily of the national kill. The MSA system takes into account all
finishes Bos taurus cattle on grain and the latter a mix of Bos factors that affect eating quality from paddock to plate, and is
taurus and Bos indicus cattle predominantly on grass. Uruguay’s recognised as a world-leading eating quality program.
beef industry is similar to Australia’s, with Bos taurus genetics,
traceability systems and an export focus, however, it remains a
much smaller competitor in global markets and produces For the latest outlook on Australian
predominantly grassfed beef. beef supply, visit:
mla.com.au/cattleprojections
Australia
Following on from a sustained period of drought from 2018–19,
notable levels of rainfall in 2020 have resulted in increased
pasture availability, predominantly across the eastern states.
After several years of high cattle turn-off and the cattle herd
sitting at historically low levels, this has created the opportunity
for producers to rebuild numbers. Driven by the ongoing dry
conditions, the Australian cattle herd dipped to a 20-year low in
2020, sitting below 25 million head. Beef production is United States
expected to tighten in 2021, as producers across the country The US is the world leader in beef production, utilising extensive
look to rebuild herd numbers, assuming seasonal conditions grain feeding systems that enable quick weight gain and
continue to support a rebuild phase. efficient outputs. US cattle are among some of the heaviest in
The Australian feedlot sector continues to grow in an effort to the world, and impressive economies of scale allow the US to
mitigate periods of climate variation and enable a consistent compete strongly with other global producers where land,
supply of beef, regardless of conditions. This ensures Australia labour and cattle are substantially cheaper.
can continue to produce high volumes of quality beef year-
Global carcase weights
round and a steady supply of product to both domestic and
international markets. 400
Average carcase weight (kg/head)
The quality and safety of Australian beef is guaranteed through 350
an assortment of traceability systems, underpinning Australia’s 300
competitive edge. The main systems underpinning Australian 250
beef are the:
200
European Union
• National Livestock Identification System (NLIS)
United States
150
• Livestock Production Assurance (LPA)
Argentina
100
Australia
Uruguay
Canada
Mexico
China
• National Vendor Declaration (NVD)
Brazil
India
50
0
For the latest outlook on Australian traceability systems Source: USDA
visit: integritysystems.com.au
The US remains a major competitor for Australia and has a
Through these systems, Australia is able to protect the disease- strong presence within some of Australia’s largest markets,
free status of Australian red meat, as well as maintain Australia’s Japan and Korea, while also expanding slowly into China
image as a clean, safe and natural producer and exporter of following the US-China trade agreement signed in early 2020.
red meat. The US can produce high quality beef, with grainfed cattle of
The consistent eating quality of grass and grainfed beef is Bos taurus genetics making up the majority of production, while
guaranteed through the Meat Standards Australia (MSA) grading developed cold chain infrastructure and modern slaughter
program, which has been developed to improve the supply of facilities provide the capability to export chilled product.
consistently high quality beef to the consumer. A record number
MLA Global beef industry and trade report February 2021 6US beef production/herd size
13.0 105
12.5
100
12.0
million tonnes cwe
11.5 95
million head
11.0
10.5 90
10.0
Brazilian Bos indicus Nelore cattle
85
9.5
Brazil’s grain feeding capabilities are building. In 2019, about 6
9.0 80
million cattle were finished on grain – almost doubling from a
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020e
2021f
decade prior, but dwarfed by the 40 million processed overall.
While feedlots currently only account for approximately 10% of
Beef production (LHS) Herd size January (RHS)
Brazil’s meat production, this is expected to double over the
Source: USDA next five years. This shift in production focus could soon see
Brazil challenge Australia and the US in grainfed beef export
The US cattle herd follows a fairly consistent cyclical pattern, markets.
and with the peak now likely to be reached in 2021, a
contraction is expected in the coming years, underpinned by Beef production and export forecasts 2021
reduced cow-calf profitability, increased female slaughter and
an eventual smaller calf crop. US beef production is forecast to 20
India
increase in 2021, as a result of a greater availability of cattle and
Percentage export growth
15
heavier slaughter weights, due in part to COVID-19’s impact on Canada
processing capacity. This increase in production will likely result 10
in US export volumes lifting, increasing competition for market 5
US Brazil
share across international markets. EU
Australia
0
-6 -4 -2 0 New Zealand
2 4 6 8 10
Regional beef production growth (2009–2029f)
-5
Argentina
25 -10
Percentage production growth
Latin America
million tonnes cwt
20 Source: USDA Foreign Agriculture Service, MLA estimates (Australia)
Note: Bubble size shows expected 2020 export volume. Percentage growth shows 2021 forecast
North America Asia relative to 2020 levels.
15
f2029
10 2009 Africa Argentina
Europe
2019 Argentina produces a mix of commodity and high-quality beef,
5
with the herd made up of predominantly Bos taurus genetics.
0
Oceania Grainfed cattle account for close to a third of Argentinian cattle
turn-off. Argentinian beef exports in 2021 are expected to
Source: FAO-OECD 2020 Outlook contract slightly as production volumes are forecast to tighten
after a period of elevated slaughter through 2020 on the back of
Brazil dry conditions across the country.
Brazilian beef production is expected to continue growing in Argentina’s beef export situation improved substantially in 2015
coming years, underpinned by a slowly expanding herd, the following the removal of a 15% export tariff, export restrictions
opening of new land for grazing, greater availability of slaughter and currency controls overvaluing the peso. However, recent
cattle and strong international demand. Brazil lacks the years have seen a surge in inflation and a collapse of the
efficiency of Australia in producing beef, but has been catching Argentinian peso. The combination of these factors has lent
up in recent years as it adopts new practices and technologies. support to the commercial viability of exporting beef rather than
selling it locally, resulting in the proportion of Argentinian beef
Compared to Australia and the US, the Brazilian herd is less
which is exported lifting from 7% in 2015 to 25% in 2020.
productive, giving it greater ability to lift future production from
efficiency gains rather than from greater resource use. Both Argentinian beef has become very competitive in the global
investment and modernisation have improved production market. China became a major destination for Argentinian beef
efficiency, with Brazil increasing beef production by 3.7 million in 2020, with shipments doubling relative to 2019 and the
tonnes (or 55%) carcase weight (cwt) since the beginning of the market accounting for almost three quarters of exports. The
millennium. price of cattle in Argentina is substantially lower than prices in
other countries, such as the US and Australia, which creates a
Brazil has been a key contributor to global production growth in
significant competitive advantage for its product.
recent years, a trend that is set to continue in 2021. Beef
production in Brazil is expected to benefit from an improving European Union (EU)
domestic market and enduring demand from China, MENA, and
The EU is a significant producer of beef, but most production is
emerging demand from South-East Asia.
derived from a dairy-based herd and consumed domestically.
The Brazilian herd is predominantly comprised of Bos indicus After an increase from 2013–19 due to a restructuring of the dairy
breeds finished on pasture and destined for the commodity beef sector, EU beef production began to decline in 2020, and is
trade. However, Brazilian livestock operations are increasingly expected to continue falling long-term until 2030. Nevertheless,
using an ‘industrial cross’ of local Bos indicus Nelore cattle with in 2020, beef production was estimated at 7.8 million tonnes cwe
US/Argentine Angus genetics. This industrial cross combines – almost four times that of Australia. France holds the position as
the feed efficiency and meat quality benefits derived from the largest beef producer in the region, accounting for 17% of EU
Angus cattle with the heat and tick tolerance found in the production in 2019, followed by Germany (13%) and the UK (11%).
Nelore breed. In 2020, domestic beef production was estimated to account for
95% of total EU beef consumption.
MLA Global beef industry and trade report February 2021 7The region is a high-cost producer of beef, remaining heavily developing the agriculture sector due to its importance to
protected from the global market while being subsidised economic growth.
through the EU Common Agricultural Policy. Regardless of the
expected decline in production, beef exports are predicted to Australian cost of production
increase by 8% in 2020, with newly obtained access into China While one of the most efficient countries to breed and grow out
for some member states combined with increasing demand from calves – largely due to high levels of broadacre labour efficiency
existing partners in the Philippines, Bosnia and Israel, and and economies of scale – Australia is less competitive in
sluggish domestic demand. Irish beef exports, currently finishing cattle relative to other major producers (the result of
dominated by the UK market, remain sensitive to the Brexit high costs of store cattle, land, labour, regulatory requirements
outcome, and may be directed into new markets in coming and feed). High on-farm costs are compounded by additional
years. The majority of beef production in the EU is traded expenses in the supply chain, particularly in processing cattle,
internally through Europe, with much of the remainder destined where Australia’s costs are twice that of Brazil’s and 24% more
for the UK. than the US’s (AMPC). With a high reliance on exports, Australia
China also faces greater freight and supply chain costs, as well as
tariffs in some markets, compared with other major producers
China is the world’s third largest beef producer. By global servicing similar domestic markets.
standards, China’s production system is characterised by
smaller-scale producers and abattoirs. An inability for local Prior to 2015, cattle prices in Australia closely tracked with
production to keep up with increasing demand has led to a South American prices on a currency-adjusted basis, but the
surge in imports in recent years. China’s domestic beef separation in markets following the 2014–15 Australian drought
production shortfall is expected to continue expanding over the has not reversed, partly due to relatively tight supplies of
next five years, with short-term fluctuations in local production finished cattle in Australia and the Brazilian real and Argentine
– which still accounts for over 70% of consumption – likely peso coming under significant downward pressure in recent
having a significant impact on import requirements. years, with both dropping dramatically in 2019.
While elevated prices are positive for Australian producers, high
India slaughter and supply chain costs mean that Australia must
Indian buffalo meat (IBM) is a commodity product that sets the continue to focus on improving efficiency and increasing the
world price floor. IBM is a by-product of the large Indian dairy value proposition for consumers in order to remain competitive.
industry, made up of many smallholders. India does not have
FMD-free status, restricting access to many countries. Global cattle prices
Therefore, it predominantly exports to developing and price
400
sensitive markets in South-East Asia and the Middle East.
IBM production expanded rapidly throughout the 2000s as the 350
dairy sector grew and buffalos began being utilised for meat,
however, it has slowed recently. While a massive industry, IBM
US¢/kg live weight
300
production remains sensitive to domestic politics, with some
Hindu groups emboldened by the Modi government calling for
its outright ban. Approximately 40% of IBM production is 250
consumed domestically, predominantly by India’s Christian and
Muslim populations. 200
India’s agriculture industry was hit particularly hard by the
consequences of COVID-19. Contractions in processing capacity 150
and logistical complications across the industry meant that
exports of IBM collapsed in the first half of 2020. While India’s 100
2012 2013 2014 2015 2016 2017 2018 2019 2020
agricultural infrastructure isn’t as developed as that of some
other beef producing nations, the underlying potential of the US Australia Brazil Argentina Uruguay Paraguay
country means the Indian government has prioritised Source: IPCVA (Argentina); MLA’s NLRS (Australia); Esalq/Cepea (Brazil); USDA/Steiner Consulting
Group (US). Finished cattle (steer) specifications vary between indicators.
Cattle slaughter costs* On-farm cost of finishing cattle**
For more information on
Australia’s comparative cost of
400 1.4 500 production, visit:
350 1.2
ampc.com.au/2018/10/Analysis-
300 400
1.0 of-Regulatory-and-Related-
250 Costs-in-Red-Meat-Processing
0.8
A$/head
US¢/kg
200 300 mla.com.au/prices-markets/
0.6
150 Trends-analysis/agribenchmark
0.4
100 200
50 0.2
0 0.0 100
Australia US Argentina Brazil Canada Australia US Argentina Brazil
Labour Utilities Certification Other Maximum Average Minimum
A$/kg cwt (RHS)
Source: *AMPC (Analysis of regulatory and related costs in red meat processing) 2015-16 typical operating slaughter costs and excludes cost of cattle.
**agri benchmark 2018 typical farm/feedlot cost of finishing cattle, includes the cost of store cattle.
MLA Global beef industry and trade report February 2021 8GLOBAL TRADE AND DEMAND
The bulk of beef consumption growth over the past decade has Australian beef exports (2000–2020)
been in the developing world, particularly Asia, with forecasts
450
for the next decade indicating a similar trend. However, surplus Japan 2000 2015
400
production remains centred in North and South America and US
350
‘000 tonnes cwt
Australasia. These production and consumption imbalances China
300
drive global trade. Additionally, reduced tariffs and sea freight
250
costs, improved cold chains and the development of governing 2020 Korea
200 Indonesia Other
institutions have supported the growth of the global beef trade
150
over the past two decades. In 2020, 17% of beef production was 2011 SEA
100 (exc. Indonesia) MENA
traded internationally – higher than poultry, pork and
50
sheepmeat.
0
Top beef exporters and importers Source: DAWE
12
Top exporters Top importers Competitive landscape
10
The competitive landscape for the global beef market has
8 evolved over the decades. While export volumes are ten-fold
US$ billion
6 what they were in the 1960s, Australia has consistently
maintained an important role within the global marketplace, and
4 remains one of the three largest beef exporters.
2
Competition in Australia’s major markets
0
More premium More commodity
Australia
Brazil
US
Argentina
India
NZ
EU*
Canada
Taiwan
Russia
UK*
Hong Kong
EU*
South Korea
Japan
US
China
100
80
Source: IHS Markit, FY2019–20
market share (%)
*EU only includes external trade but UK includes trade within and outside the EU 60
Australia exports approximately 75% of beef production – 40
far more than most but comparable to New Zealand and
Uruguay – and as such, is heavily exposed to currency 20
fluctuations, the health of the global economy and market
access changes. Australia is a major player when it comes to 0
ia
A
n
US
a
da
an
EU
ina
sia
s
exports, particularly in providing high value product backed by
ne
re
pa
EN
ys
iw
na
ne
Ch
Ko
pi
Ja
ala
M
Ta
Ca
do
integrity and quality assurance systems. For FY2019–20,
ilip
M
In
Australia was the beneficiary of a soft Australian dollar that Ph
Imported beef market
contributed towards making it the most valuable year for beef Supplier: Australia Argentina Brazil Uruguay US
exports on record. Canada Mexico India NZ Other
The Australian outlook is for tight supplies in 2021, with beef Source: IHS, data is for FY2019-20
exports forecast at approximately one million tonnes shipped
weight (swt). Diminished supply will intensify competition for The US is Australia’s single largest export competitor due to its
market share across export markets. Forecast growth in beef access to high value markets, large scale and exportable
production from the US will place pressure on Australia’s high surplus, and ability to supply large volumes of high quality
value export markets, while production growth in Brazil and chilled product. The US exports significant volumes of beef to
India will lead to further competition for Australian manufacturing Japan and Korea and maintains a minor presence within the
beef and live cattle exports to China, South-East Asia and the Greater China and South-East Asian markets. Competitive
Middle East and North Africa region. Strategically targeting high pressure from the US is set to increase due to an expanding
value markets will continue to be a priority for Australia at a time production base and market access improvements. Some of
when domestic supplies are expected to tighten. these access improvements include:
While production trends paint part of the picture, market access • In 2019, the US came to an agreement with the EU to ‘ring-
changes, such as the increasing number of South American fence’ a portion of the EU High Quality Beef (HQB) grainfed
plants gaining export approval for China, could have a far quota (shared with Uruguay, Argentina and Australia), which
greater competitive impact on Australian beef in some markets. provides the US with exclusive access to 18,500 tonnes swt of
the quota, which will increase incrementally to 35,000 tonnes
swt over a seven-year phase-in period.
• At the start of 2020, the US reached an agreement with Japan
to bring tariffs on US beef in line with signatories to the
Comprehensive and Progressive Trans-Pacific Partnership,
but it will operate within its own smaller safeguard.
• The US-China Phase One trade agreement also entered into
force in January 2020, but little trade is yet to materialise.
MLA Global beef industry and trade report February 2021 9South American suppliers Brazil and Argentina have emerged plants for exports. Almost half of all the beef exported from
as major trade competitors in the past decade. They both have Brazil in 2020 was sent to China, representing a remarkable shift
large production bases to draw exports from, and in recent in focus from last year when China accounted for 24% of
years favourable shifts in exchange rates and the poor Brazilian beef exports. Currency movements have also had a
performance of their domestic markets have promoted the profound impact on the affordability of South American exports.
appeal of exporting meat. The Brazilian real depreciated from 2018 through 2020, finishing
2020 near an all-time low of US$0.19, making Brazilian beef
Global top three imported beef markets more affordable on the global market.
South American suppliers may soon benefit from the EU-
2,500
Taiwan Mercosur trade agreement and the ear-marked 99,000 tonnes
Hong Kong of access provided to the EU market, however, this agreement is
2,000
yet to be ratified and political appetite may be waning on both
‘000 tonnes swt
1,500 sides to finalise the deal. Additionally, in 2019 Brazil was
permitted 50,000 tonnes of access into Indonesia, which will
1000 potentially impact Australian cattle and beef shipments if fully
China realised. However in 2020, only 4,000 tonnes swt was sent.
500
Other exporters, such as New Zealand and Canada, compete in
0
similar markets and segments to Australia, but opportunities to
Greater China US Japan South Korea Russia expand exports remain limited by supply. New Zealand is
heavily reliant on trade to the US and China, with smaller trade
Source: IHS, data is for FY2019-20 volumes flowing into a variety of other destinations. Canada is
the leading supplier of beef to the US and also supplies sizeable
With South American trade ramping up in recent years, China volumes to Japan. While India is an exporting powerhouse,
has been a key target market for expansion. After the sudden it purely supplies IBM to South-East Asia and the Middle East.
emergence of the ASF-induced pork deficit in China in 2019,
trade flows between these nations advanced rapidly, with
Chinese officials promptly approving dozens of South American
Evolution of China beef imports
250
200
ASF discovered in China,
August 2018
150
million tonnes cwe
100
50
0
2012 2013 2014 2015 2016 2017 2018 2019 2020
Brazil Argentina NZ Uruguay Australia US Other
Source: IHS, China Customs
Beef trade growth over time
12
10
Creation of WTO
8
million tonnes cwe
6
4
20
0
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Brazil Australia India US Other
Source: USDA
MLA Global beef industry and trade report February 2021 10The influence of African Swine Fever Chinese beef consumption
ASF has quickly spread throughout Asia’s largely informal and ASF discovered in China, August 2018
Imported beef % of beef consumption
fragmented pork industry. The disease is transmittable when 10 30
pigs come into direct contact with infected animals, indirect 25
8
contact with contaminated objects or are fed contaminated pork
million tonnes cwe
products. The disease has a near 100% mortality rate and once 20
6
it makes its way into a pig herd, culling the pig population within 15
the immediate area is currently the best method of defence. The 4
transmission of the disease has been accelerated by wild pig 10
populations carrying the disease across country borders. 2 5
Vietnam, Cambodia, Laos, Myanmar, Mongolia, Indonesia, East
0 0
Timor, Korea and the Philippines have all reported cases of ASF
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020f
2021f
since the onset of the outbreak in China in 2018.
Domestic production (LHS) Import volume (LHS)
Distribution of ASF Import percentage (RHS)
Source: USDA
Chinese pork consumption
ASF discovered in China, August 2018
Imported pork % of pork consumption
60 12
50 10
million tonnes cwe
40 8
30 6
Current unresolved disease event 20 4
Source: World Organisation for Animal Health
10 2
ASF continues to have a large influence on global markets, with 0 0
world pork production in 2020 estimated to be down 18% on
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020f
2021f
2018 levels (prior to the spread through Asia). While pork
exports from the US, Canada and Brazil lifted substantially in Domestic production (LHS) Pork imports (LHS)
response to the supply shortage, this wasn’t enough to cover Import percentage (RHS)
the deficit. In China, price inflation across meat categories Source: USDA
occurred as demand hugely outstripped available supply.
However, prices have eased in the latter part of 2020 as pork Australia’s market access
production begins to recover. In November, the China retail pork
price was up by 141% year-on-year, while chicken, beef and Trade is central to the ongoing viability of the Australian beef
sheepmeat were up 28%, 24% and 22%, respectively. While industry, and pursuing unrestrained entry to global customers
ASF-affected countries have sought to prevent further remains critical. Australia’s access to export markets has
outbreaks by utilising biosecurity measures to contain the virus, generally improved over the past three decades, led initially by
its highly infectious nature makes all containment challenging. multilateral negotiations through the World Trade Organization,
and more recently through a series of bilateral and regional free
In 2020, Chinese pork production was estimated to be down
trade agreements. Reductions in non-tariff barriers have also
30% on 2017 levels, with the breeding herd down approximately
been advantageous, however, many remain and have a
50% for the same period. Based on these figures, the Chinese
noticeable impact on the cost of doing business.
pork contraction has equated to approximately 17 million metric
tonnes. There has not been sufficient meat traded globally, let Australia has some of the best beef access globally due to trade
alone out of Australia, to fully cover the immediate deficits in reform initiatives and Australia’s reputation as a safe and reliable
China, hence the rapid surge in demand. The bulk of major beef supplier, underpinned by a suite of industry integrity and animal
exporters all recorded unprecedented beef trade with China in health status systems. Australia now has free trade agreements
2020, while Australia was hampered by supply constraints. with most major beef import markets including the US, Japan,
Korea, China and Indonesia, which represented 84% of
In response to the production deficit in China, pork export
Australian beef and veal export value in 2019–20. The EU and
volumes from Spain, the US, Germany, Canada and Brazil all
Russia remain exceptions.
lifted sharply upwards to respond to the spike in demand.
However, Germany, accounting for 17% of China’s imported pork The Comprehensive and Progressive Trans-Pacific Partnership
in 2019, has since reported outbreaks of ASF. China (CPTPP) has been ratified, providing improved access to Japan,
subsequently paused all trade with Germany. This contraction in Canada and Mexico. The Regional Comprehensive Economic
pork supply may provide further support for demand of other Partnership (RCEP) – a multilateral agreement between ASEAN
proteins, such as beef. nations and China, India, Australia, New Zealand and Korea –
came into force in November 2020. Additionally, new trade
In 2021, pork production in China is expected to grow for the
agreements with Indonesia, Hong Kong and Peru will facilitate
first time since 2017, and as the Chinese swine herd recovers,
trade and foster new opportunities.
this will likely curb the expansion phase of Chinese beef
imports. Regardless, beef import volumes should remain at Australian trade negotiations with the EU commenced in June
historical highs, given that Chinese pork production still remains 2018, while negotiations with the UK began more recently in
well back on the typical pre-2020 volumes. June 2020. While existing EU quotas will be split between the
EU and UK as a result of Brexit, these negotiations represent the
first opportunity in over 40 years to significantly reshape
Australia’s red meat market access and provide opportunities to
modernise the existing trade regime.
MLA Global beef industry and trade report February 2021 11Recent political shifts have resulted in trade liberalisation Major live export trade flows also exist across North America,
becoming increasingly challenging. The increase in primarily comprised of feeder cattle from Mexico and Canada
protectionism, led by the US’s approach to trade, does pose destined for US feedlots, as well as finished cattle from Canada
some risk, but Australian beef exports have largely avoided any and the US crossing the border to be killed in either country.
blowback from the US-China trade war. However, trade tensions While Mexico has traditionally exported over one million cattle a
between Australia and China rose through 2020, which has year to the US, the synergies and sea freight infrastructure are
resulted in China restricting imports of certain Australian not in place to ship large quantities to South-East Asia.
agricultural products, including beef from certain plants. Brazil, another major exporter of cattle, previously focused
Australia’s favourable access to global markets is underpinned shipments within South America, however, its attention has
by strong animal health credentials, world-leading animal since shifted to the Middle East, particularly Turkey. While
traceability and food safety systems and the fact it has never Brazil’s FMD status is a barrier for exporting cattle to Indonesia,
had a case of foot-and-mouth disease (FMD) or bovine FMD is already an endemic disease in Vietnam (Australia’s
spongiform encephalopathy (BSE). While Australia’s track record second largest market) and Brazil is expected to be granted
has sheltered the industry from competition, sanitary and access in the near future, following sanitary agreements
phytosanitary measures imposed on other exporters due to between the two countries in 2019. The EU also ships
various diseases continue to be wound back, and Australia is considerable volumes of cattle to markets across the Middle
being increasingly exposed to a widening line-up of competitors East, but no trade exists to South-East Asia.
across markets.
Live exports Value of exports for major live cattle suppliers
Australia is a leading long-haul exporter of live cattle globally, 1,500
Trade to
with trade links to supply chains in South-East Asia and the SEA & MENA
1,200
Middle East. Trade dynamics allow Australia to be the leading, Trade within Trade to
North America MENA
if not sole, supplier of cattle to many countries, however, the
US$ millions
900
high cost of Australian cattle presents a significant challenge in
price-sensitive markets. 600
Indonesia is the leading destination for Australian feeder cattle.
300
Broadacre pastoral production in northern Australia is very
suited to raising calves but less so to finishing cattle, while
0
efficient Indonesian feedlots can utilise by-products from palm Australia Canada US Mexico EU-28 Brazil
oil and other crops as low-cost feed options. A lack of cold chain
Source: UN Comtrade, 2019-20 exports
infrastructure and the dominance of wet markets also supports
the customer preference for freshly slaughtered cattle.
Australian exports to Vietnam are based on similar
fundamentals, however, the trade is predominantly made up of
slaughter cattle, underpinned by constrained feedlot capacity
and the market’s preference. Vietnam’s feedlot industry is an
exception to this, with expected development in the
coming years.
MLA Global beef industry and trade report February 2021 12SUMMARY TABLE
Argentina
Australia
Uruguay
Canada
Mexico
EU-27
China
Brazil
India
NZ
US
Cattle head (million 24.6 10.2 94.4 16.9 11.2 244.1 54.5 11.5 303.1 91.4 77.1
head)*
Dairy % of cow herd** 8% 82% 23% 31% 22% 43% 8% 7% 100% 20% 65%
Cattle and calf
slaughter (million 7.4 4.4 33.3 6.4 3.5 39.9 14.1 2 34.8 48.5 24.0
head)*
Cattle exports (million
1.1 0.12 0.29 1.5 0.64 0.29 - 0.12 - 0.02 0.96
head)*
Beef and veal
2,072 675 12,374 2,090 1,310 10,100 3,180 510 3,650 6,780 6,880
production ('000 cwt)*
Total domestic
consumption ('000 567 79 12,610 1,870 1,048 7,600 2,385 160 2,600 9,515 6,570
tonnes cwt)*
Domestic share of
27% 10% 89% 83% 62% 75% 75% 22% 71% 100% 95%
production
Per capita domestic
consumption (kg/ 22.0 16.7 38.0 13.0 25.5 35.4 53.5 56.3 0.8 6.1 14.9
person cwe)***
Beef exports ('000
1,214 460 931 255 363 1,658 602 295 914 - 454
tonnes swt)†
Chilled % share of
25% 7% 45% 87% 81% 11% 14% 10% 1% - 60%
exports†
Average export price
5.86 5.26 7.06 5.71 5.85 4.45 5.19 5.56 2.85 - 4.82
($US/kg)††
UK,
Japan, US, China,
China, China, US, China, China, Vietnam, B&H†††,
Top three export South South US,
Japan, US, Japan, HK, Chile, Malaysia, - Switz-
markets† Korea, Korea, Neth-
US Japan HK Egypt Israel Egypt erland
Mexico Japan erlands
Source: *USDA, MLA (Aust.) 2020 estimate; **USDA 2020 estimate; *** MLA (Aust.), FAO-OECD 2020 estimate converted to carcase weight equivalent, USDA 2020 estimate; †IHS, DAWE (Aust.) 2019-20 actual,
††IHS 2019-20 actual. †††Bosnia & Herzegovina
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