The Australian media is reporting that China has 'banned chilled Australian beef" imports citing food safety issues.
New Zealand's preferential trade status with China should help maintain our significant head start in beef exports, but we are at risk too of such non-tarriff action.
Aussie Trade minister Andrew Robb has apparently acknowledged the issue, saying China had "queried" the standards of Australian chilled beef.
Queensland Premier Campbell Newman, whose state is a big beef producer and is on a trade mission in China, said the situation had been raised with him and he was "concerned".
The AFR has been told that Chinese authorities are no longer accepting chilled beef, as Australian processors did not have the correct certification. Prior to this abattoirs were certified for both chilled and frozen beef exports to China.
But this is no longer the case and big meat processors such as JBS and Teys are now facing a lengthy certifications process before exports can resume.
On the basis of this "advice" from the Chinese, Australian quarantine authorities have stopped issuing export certificates for chilled beef.
The Aussies suspect something more than 'food safety'; politics, and protection of local Chinese producers.
One Australian exporter, who asked not to be named, said the ban was about protecting local producers who had been squeezed out of the market by surging imports.
Another industry figure in Shanghai said the ban was "totally political" and was due to concerns from the local industry that Australian exports had grown too quickly.
Australian chilled beef exports to China have surged 800% over the last year, in part due to a crackdown smuggling and a series of food scandals involving local producers.
Rabobank analyst Matt Costello says beef exporters across the globe are now looking to China in an attempt to understand whether this demand surge will plateau or if the need for beef imports will continue to grow.
“Chinese producers and processors are also aware of the looming structural deficit in the beef sector and are adopting different strategies to secure supply amid an environment of flattening global production,” he says. “The rapid growth of the quick service restaurant (QSR) sector in China is providing an efficient channel for increasing beef consumption among the young and wealthy."
The Chinese middle class continues to grow at the staggering pace of 27 million people per year and is currently sitting a 300 million.
"Rapid urbanisation is driving demand for beef in China – in 2012, annual average beef consumption for an urban citizen grew to six kilograms, compared to three kilograms for consumers in rural areas," says Costello
Other countries are having issues getting beef into China.
Although there is some US beef also entering China via grey channels, ongoing trade restrictions limit the competiveness of US exports including the ban of growth promotant – ractopomine – and BSE disease (bovine spongiform encephalopathy or ‘mad cow disease’) history.
"Like the US, beef powerhouse Brazil has also been facing an export ban into China due to BSE issues, however when the Brazilians do regain access to China, New Zealand should expect to face strong competition for lower value product in the market," Costello says.
"Bearing all this in mind, New Zealand exporters should be using this current trade advantage to cement their positions at the top end of the market with a targeted campaign that looks to differentiate their product."
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