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Outlook for the Australian beef industry Phillip Island August 2009

Outlook for the Australian beef industry Phillip Island August 2009. JOHN WYLD, Board Member Meat & Livestock Australia. Box Plains – Tarwin Lower. Young Koolomurt Bulls. Address outline. The short term challenge – the global economic crisis Medium to longer term market prospects

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Outlook for the Australian beef industry Phillip Island August 2009

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  1. Outlook for the Australian beef industry Phillip Island August 2009 JOHN WYLD, Board Member Meat & Livestock Australia

  2. Box Plains – Tarwin Lower

  3. Young Koolomurt Bulls

  4. Address outline • The short term challenge – the global economic crisis • Medium to longer term market prospects • Longer term industry issues / challenges

  5. CREDIT CRISIS • Tighter Credit Availability • Currency Turmoil • Economic Recession • Trade Disruption • Demand Downturn

  6. Impact of the GCC on the beef trade • De-pipelining in all markets – minimise stocks to minimise credit & exposure • Shaken up the trade as line of credit tougher, & importers caught with dear product • some importers will not survive • Russia buying ceased for a while • Korean buying low • not helped by stocks of cheap US beef

  7. United States Australia Conference Board Roy Morgan Consumer Confidence Index Consumer Confidence Rating 140 150 130 120 100 110 100 50 90 80 0 97 99 01 03 05 07 09 2004 2005 2006 2007 2008 2009 Consumer sentiment plunges globally

  8. Impacts of the GCC on the meat consumer • Overall fall in expenditure on food and meat • Shift from dearer foods to cheaper foods • eg. from beef to poultry • Less eating out & more at home • Fall in food service sales • Rise in retail sales • Shift from dearer foodservice to cheaper food service • From middle to upper level restaurants • To fast food • At retail, shift from steaks to sausages & mince • Importantly – it is happening everywhere at the same time!

  9. GFC positive for lamb, but not beef. Why?Its a matter of supply and demand balance 2009 lamb price ▲21% 2009 cattle price ▼2% Strong Middle East & Asia demand low global supply Lack of credit De-stocking US return drought dairy cow kills US demand 8%

  10. Medium to longer term prospects

  11. Remember the global food price inflation crisis of 2007/08? Mexico Argentine Africa Venezuela Indonesia

  12. Remember the global food price inflation crisis of 2007/08? Mexico Argentine Africa The current global turmoil only gives the world a short respite from these pressures Driven by the industrialisation of the population hubs of China & India shortage of agricultural land & need for more land for grain production – for ethanol & food Venezuela Indonesia

  13. …. and population Growth in world GDP Growth in world population US$ (trillions) billions 80 10 Current crisis 8 60 6 40 4 20 2 0 0 1950 1970 1990 2010 2030 2050 1980 2000 2016 Meat consumption is driven by two basic factors - income

  14. Projected beef import growth 2008 to 2018: FAPRI

  15. Longer Term Challenges:Competition Nutritional Issues Animal Welfare Market Access Environment – Climate Change

  16. Competitive challenges

  17. Brazil & other beef exporters will compete fiercely with Australia to exploit available opportunities

  18. Nutritional issues

  19. Vegetarianism on the rise?

  20. Animal welfare

  21. Animal activists/welfare • Increased pressure from animal activist/welfare groups: • sophisticated and well funded campaigns • Online • Community networks/events/youth groups • Influencing community support and perceptions of the trade • Petitons/letter writing campaigns to Government

  22. Market access

  23. Every Market we service has barriers E.g. Japan 38.5% import duty EU 7,500 tonne quota plus 20% duty 80% over quota

  24. WTO Doha Round • - On ‘life-support’ - cautious optimism to outright pessimism • -No appetite by some of the 153 members for trade reform • - The likely outcome….. Lower ambition than sought

  25. Free trade agreements The World does have an appetite for FTAs (400+)

  26. Environment

  27. Australian greenhouse gas emissions • Agriculture’s contribution to national emissions

  28. Cattle are far more polluting under Kyoto protocol methodologies than other types of livestock

  29. Impact of CPRS on the beef industry with agriculture included % change in gross value of production % change in gross value of production 0 0 -5 -5 -10 -10 -15 -15 -20 -20 2020 2020 -25 -25 2030 2030 -30 -30 -35 -35 Beef Pork Poultry Grass Grain

  30. Beef industry attracting unfavourable publicity generally over the environment

  31. Favourable future, Australian industry well positioned • Beef consumption & trade expected to grow • Australia is one of the world’s most efficient suppliers of grassfed & grain-finished beef • Good product quality & rising • Meat Standards Australia/Eating Quality Assured • Top disease freedom • Safe meat & product integrity • LPA, supply chain QA, NLIS • We ignore the challenges we face at our peril • But MLA & Industry well aware and working hard

  32. Thank you

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