Cattle to set sail to China

China is already Australia’s second largest market for live animals worth $254 million last year in taking 118,000 head of breeder/dairy cattle valued at $206m.

The live slaughter and feeder cattle market was opened up in July this year and is tipped to reach 1 million head per year in a decade under the new health protocol arrangements agreed between the two governments.

Chongqing Hondo Agriculture Group president Qin Ya Liang said he was very excited to receive the inaugural shipment of 150 head of Australian slaughter-ready live cattle which arrived in Chongqing on a 747 jumbo jet last week and would be looking to place another importation order very soon.

But Mr Qin stressed his company preferred using sea-freight to achieve the large cattle volumes required to service the growing local beef demand.

He told local media his company was already talking to local government officials in Chongqing and the local transport department to see if sea vessels can deliver cattle, direct from Melbourne to Chongqing, in south-west China.

Chongqing is situated on the Yangtze River - Asia’s longest river and the third largest in the world - measuring about 6300 kilometres, flowing east of Chongqing out to the sea, at Shanghai.

While not located on the China coast, Chongqing does possess a significant inland sea freight port with the capacity to handle large volumes of foreign cargo.

Elders International sales manager David O'Hare played a leading hand in overseeing and bringing together last week’s historic first shipment of live slaughter-ready cattle along with Elders International general manager Cameron Hall.

Mr O’Hare told Fairfax Agricultural Media at least three other Chinese customers had signed-up for future shipments but the next consignment from Australia may not happen until 2016.

He said the Australian and Chinese governments would review the first trial shipment between Elders and Hondo to iron out any issues and implement future solutions.

“This first consignment was a trial shipment and we’ve got that one over the line,” he said.

“It has been delivered and executed perfectly even though it took a little bit of time to happen but that’s due in part to the political process.

“However, I’d imagine we’ll be into 2016 before we see another consignment going to China which would likely be by sea.”

Mr O’Hare said future export capacity into China would be largely destination driven and while Hondo wanted to import cattle direct via sea, from Australia to Chongqing - where it dominates the beef processing and retail market - the Yangtze River had its restrictions.

He said other parts of China would be more easily accessible for large volumes of live cattle arriving on board ships.

“There is some ambition to take ships up rivers but that would be subject to draft (clearances) under and over the ship with bridges and so forth,” he said.

“The eastern seaboard of China is accessible to sea freight and there are rules and regulations on how many exporters can service each province which is yet to be defined but that will change probably once the market opens up.

“That issue needs to be opened up for discussions because it does add another challenge to what we’re trying to achieve.

“There are several Chinese customers - importers - actually in a position where they’re ready to be audited and have the ESCAS supply chain arrangements put in place.

“But before that happens we need to ensure we execute this first shipment correctly and everything’s well and truly above board so this trade does start, on the front foot.”

Federal Agriculture and Water Resources Minister Barnaby Joyce says the live cattle trade to China will “ramp up” over time moving from air freight initially, to sea cargoes in larger volumes.

Mr Joyce said in future, regional airports located in beef producing regions could have the capacity to be the live trade’s loading docks into China.

“Aircraft pay for themselves – if they can do it economically,” he said.

“And you can land planes at Toowoomba, Tamworth, or Longreach and why shouldn’t you be able to load cattle there?

“It’s all part of the vision for agriculture for the future.

“Australian cattle exports to China will ramp up over time.

“You’ve got to test the supply chains at the start of the process and work within ESCAS but once the process is working you can then increase volume.

“I’m always bullish about talking about the price of cattle being sustainable over the long-term but I want people to hold back the breeders, and breed the numbers up.

“We don’t want the problem where the price is great but we don’t have the product to meet demand.

“But again I would say to Australian super-funds, you’re standing by and watching other people capitalise on a major market that’s right under your nose.”

Mr Joyce said Australia was at the forefront of animal husbandry processes globally due to ESCAS which would accompany the new cattle export market into China.

“People will always point out the flaws in our system but they will rarely recognise the fact that no other nation on earth has ESCAS and people should be behind the fact that Australia leads the world in this area,” he said.

“If other parts of the world had an ESCAS system, then maybe that itself would inspire the continual upgrade and improvement of animal husbandry.

“And isn’t that the best outcome; isn’t that what we want to do?

“Who’d ever want to solve a problem just from one country; wouldn’t you want it solved globally?

“And therefore we should be encouraging other countries to use ESCAS and that becomes part of the premium sale of a product where you can say, ‘this is ESCAS approved meat – it came in via an ESCAS system’ and other meat you might buy is not produced according to the same standards’.

“It’s just like an extension of our country of origin labelling.

“We can say that our product is clean and green and we make our best endeavours to ensure our animal husbandry ethical standards are world-leading.

“They are never perfect; perfect never happens; but they are vastly better than what’s provided by any other country in the world.”

Mr Joyce said he believed China’s animal welfare standards were increasing, as they also developed other areas of society, including middle-class wealth.

“People see acceptable animal welfare and animal husbandry standards as a sign of social advancement,” he said.

“It also becomes part of how you get a clean green product onto the market place.

“In the modern market - it doesn’t matter if you’re in Australia Japan, China or Korea – consumers want high standards because it reflects on the class of meat.

“If the animals are badly treated, the meat product won’t taste as good so people want low stress animals.”