2 February 2004
Despite a rising dollar, the lingering effects of drought and uncertainty surrounding BSE outbreaks in North America, the Australian beef industry is facing a positive future, according to leading agribusiness specialist Rabobank.
Rabobank Food & Agribusiness Research analyst Fiona Boal says the industry has seen a re-weighting of the factors that traditionally determine the prosperity of the sector.
"Fortunately for Australian producers, much of the negative impact usually associated with a rising dollar has been dwarfed by the positive factors that are currently in play, including restricted global beef supplies and stable international demand. This has set the scene for continued strong cattle prices," she says.
Ms Boal says while no one likes to benefit from the misfortune of others, recent BSE cases in the US and Canada have opened some doors for Australian beef exports.
"Our ability to take up the slack in export markets such as Japan from a volume perspective will be limited, but Australia should benefit from the increase in the value of beef in those markets. Over recent weeks export prices to Japan for Australian beef have risen between 30 and 50per cent," she says.
Ms Boal says many exporters will face difficult management decisions about where to direct limited beef supplies.
"They will need to make a call on what markets and relationships are most important in the long term. Lotfeeders and exporters will also be cautious to commit additional resources to increasing their output, given the uncertainly over when the US and Canada will return to the international market," she says.
In terms of beef consumption in the US (Australia's largest beef export market by volume), Ms Boal says "demand fortunately has held up pretty well to date".
"The majority of our market in the US is lean manufacturing beef that is not available in large quantities from the US domestic industry," she says.
Given the myriad of recent food safety scares, Ms Boal says, the Australian industry was also benefiting from the proactive approach it had taken to developing international markets and educating consumers about Australia's safe, clean, green product.
"While any additional BSE safeguard measures will add costs along the value chain, the Australian industry should not be required to make wholesale changes to its production and processing systems," she says.
"In the longer term, Australia's unique production system, advanced animal identification and traceability and existing market access should hold it in good stead," she says.
These changing dynamics will be further analysed in Rabobank's upcoming beef global focus research report to be released in late March, coinciding with Rabobank's sponsorship of the World Hereford Conference.
Rabobank Australia is a part of the international Rabobank Group, the world's leading specialist in food and agribusiness banking. Rabobank has more than 100 years' experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank has a AAA credit rating and, in recent years, has twice been awarded the title of the world's safest bank by Global Finance magazine. The bank operates in 35 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1900 offices and branches.
Rabobank Australia is one of Australia's leading rural lenders and a significant provider of business and corporate banking and financial services to the food and agribusiness sector. The bank has 40 branches throughout Australia.
Contact
For further information please contact Denise Shaw, Public Relations Manager (Tel: +61 2 8233 8744) or email on sydney.mediarelations@rabobank.com.