Anticipation grows that suspended beef plants may soon regain China access

Anticipation

THERE’S growing anticipation in red meat processing circles that China may be poised to lift suspensions on eight Australian export beef processing plants that have been unable to trade into the market for up to four years.

Tariff hikes on wine, barley and rock lobsters, together with beef export license suspensions, were part of trade sanctions China placed on about $20 billion worth of Australian exports four years ago after Australian criticism of China’s domestic and regional policies.

Since May 2020, large Australian beef export processors including Kilcoy Global Foods north of Brisbane, Northern Cooperative Meat Co near Casino, John Dee near Warwick, Australian Country Choice near Brisbane, plus JBS Australia Queensland plants Beef City and Dinmore lost access to China through suspensions – mostly over alleged documentation irregularities. None have managed to regain trade access. The smaller Meramist multi-species export plant north of Brisbane was suspended later.

Other suspensions at Teys Naracoorte, JBS Brooklyn and ALC Colac over COVID-related health matters have since been lifted.

False starts

There have been a number of earlier false-starts around the lifting of suspensions on Australian beef plants, some prompted by China’s lifting last month of extreme tariffs on Australian wine and barley.

Trade sanctions remain on Australian rock lobster, but members of that industry also remain hopeful of a breakthrough in access, the ABC reported in April.

Back in November Prime Minister Anthony Albanese and Trade Minister Don Farrell visited China to attend a trade expo in Shanghai, prompting some speculation of a beef announcement.

Chinese Premier to visit

Fuelling recent anticipation over a trade breakthrough is the proposed Australian visit next month by Chinese Premier Li Qiang, who ranks second in seniority only to President Xi Jinping. Political commentators says his visit is most likely to coincide with an Australia China Business Dialogue scheduled for June 14 in Sydney.

Adding to recent government-to-government relations-building, Chinese Foreign Minister Wang Yi visited Australia briefly in March.

However a military incident earlier this month involving Chinese aircraft and an Australian helicopter taking part in a United Nations mission to enforce sanctions against North Korea, produced a brief exchange from both sides condemning each others’ actions, showing just how fragile the relationship can be.

Longer history

While some anticipate (or perhaps more accurately, speculate) that Premier Li’s proposed visit next month will be the catalyst for a beef access breakthrough, others have told Beef Central that the latest progress pre-dates any government visit announcements.

One suspended beef exporter told Beef Central his business was asked by regulators in Canberra some months ago to make sure its Corrective Actions for China were up to date, in preparation for any movement. That was followed some weeks later by advice from the company’s China office that China’s Department of Commerce had told GACC (China’s equivalent of Australia’s DAFF) to prepare documents to allow suspensions to end.

Evidently that process is now complete, and all that remains is for someone in China to ‘hit the green light,’ Beef Central was told.

“Typically there is no big announcement over such trade developments – it’s simply a matter of an official advice arriving in the company’s email inbox overnight, permitting trade to re-commence,” one processor caught up in the suspension saga said.

Two-stage process

It’s widely anticipated that trade access relaxations, if they happen, will occur in two stages.

The first will be the eight suspended plants that have accumulated since 2020. The second will be the collection of 14 other beef and sheepmeat export plants that have applied for chilled and/or frozen meat market access – and been audited – but which have so far failed to gain access.

At the same time, exporting countries like Brazil have seen large numbers of beef plants admitted for trade to China, often in batches of a dozen or more every few months.

If an official announcement happens during Premier Li Qiang’s visit next month, it’s inevitable that the Australian Federal Government will try to grandstand over the outcome, being keen to attempt to restore some lost credibility in the agriculture sector following this month’s widely condemned closure of live sheep exports.

But bigger picture issues, like China’s interest in joining the Trans-Pacific Partnership, may yet influence the timing of any announcement, Beef Central was told.

Added demand for commodity type beef

If a breakthrough does occur for suspended red plants and/or others seeking China market access, it would add export demand mostly for cheaper commodity type beef, and some cuts that are harder to sell, one affected exporter told Beef Central this morning.

“The Chinese economy is currently in a pretty poor state, and demand for all red meat product – especially higher-value product has been hard hit,” he said.

“The money is no longer there for that high-end product that there once was, but what does move are some of those bulk commodity items that might otherwise have gone to a price-sensitive market like Indonesia. You can just get containers of those items in – the money might not be any better than anywhere else in the world, but you can at least move that lower-demand product,” he said.