Beefing up China trade

With some Chinese meat processing plants running at 30 per cent below capacity (or less), quartered carcases from the rapidly growing Australian export beef trade represent a good opportunity to better utilise their facilities.

Australia sold 155,000 tonnes of beef to China last year - up about 370pc on volumes in 2012, yet still only a tiny 3pc of the nation's 6.2 million tonne annual beef consumption.

While most Australian exporters are geared up to supply boxed beef cuts to China and other export destinations, the carcase trade could represent a handy lower-cost option for some.

Some, including Queensland beef producer and processor Stanbroke, Hunter Valley Meats in NSW, Nippon Meat Packers and leading national processor Swift and Company, have been keenly promoting their fast expanding Chinese export beef business at major meat trade exhibitions in Shanghai and Beijing in the past six weeks.

"China is quite a sophisticated beef market, with quite a lot of different processing facilities, but they are clearly running short of local supplies," noted a sales representative with one Australian beef export brand taking part in recent promotions.

Given rising demand quartered carcases in China offered opportunities to potentially bypass some costly local processing costs, saving as much as 30pc.

One exporter noted his company may well lift its supplies by another 20pc by 2015, if current sales trends continued.

However, while Meat and Livestock Australia's greater China regional manager Andrew Simpson expected the carcase trade to grow, he did not foresee a big swing in that direct- ion yet, partly because boxed meat was easier to load and handle in Australia.

Local processors had generally configured their plants for box packing in the past two decades and were also likely to extract better sales margins by selecting and packing different cuts for various overseas destinations.

Frozen carcase beef from Australia also presented potential preparation problems in Chinese processing plants where thawing facilities had to be appropriate to ensure meat retained its quality as it defrosted across several days.

Although the China trade was not likely to be limited to frozen exports for long, chilled sales have been suspended since September when Chinese and Australian authorities agreed to review import protocols and health certification rules.

Mr Simpson said the past two years had seen phenomenal growth and Chinese enthusiasm for Australian beef, with many new local businesses emerging to buy an expanding range of product.

"Two years ago 45pc of Australian exports to China went into manufactured products," Mr Simpson said.

"That market now represents just 20pc as cuts like brisket are prepared for higher value meals like the rapidly expanding hot pot restaurant market.

"China is bringing a lot of competition to our export market for primal cuts - it's also a keen buyer of products like bone, offal and marrow."

Andrew Marshall travelled to China as a guest on this month's Elders China wool tour.