Reforms In Australian Meat Industry Essay

Question:

Discuss about the Reforms in Australian Meat Industry.

Answer:

Australia’s beef and meat industry can be identified as one of the leading producers of beef in the world. According to the reports published, in 2015-16, Australia was the largest beef exporting nation of the world (Ams.usda.gov, 2017). In this particular study, the economic reform in the Australian meat industry has been elaborated supportive for the growth of the sector in the long-term. In order to identify the current status of the beef industry in Australia, a recent article written by Locke (2017) has been taken into account describing the key uncertainties to be faced by the beef industry of Australia in 2017.

Locke (2017) stated that latest global uncertainties such as the event of Brexit and new policies of US President Donald Trump have created significant challenges for Australian meat industry. The US President has vowed to partner Mexico with tariffs to develop larger beef production in the United States. As a result of the scenario, the export of beef from Australia can experience substantial headwinds. On the other hand, China’s surging demand for the live cattle has been a positive sign for Australia’s meat industry. Meanwhile, the shipment of 1,200 Angus cattle has verified that the demand for high-quality Australian beef has been kept intact in China.

In the current scenario, the Australian meat and beef industry is going through an unprecedented era of indecision driven by new US policies and Britain exiting from the European Union. Presently, the new US President has tried to negotiate with the Chinese government so the US beef can be reopened for the Chinese market since the incident of mad cow disease. According to Locke (2017), one of the first steps taken by Donald Trump after getting elected as the US President was to withdrawn the name of his country from the Trans-Pacific Partnership (TPP). After the exit of the United States from the TTP, it becomes an independent beef producer. However, the Australian Government decided to remain with the TTP and said that it will progress with other partners. Hence, the outcome of the economic reform led to a downfall in the Australia’s largest beef market by volume, i.e. the United States by around 42 percent in the year 2016. Furthermore, recent growth in the market competitors has also affected the meat and beef sellers engaging in the business since decades (Gillard and Monypenny, 2016). It can be seen that the increase in the level of competition in the global market has directly impacted the Australian Beef exports in the year 2016. A significant fall in the Australian beef export can be evident that impacts the GDP contribution of the livestock industry. A figure has been presented herein below for better understanding:

Figure: Australian Beef Exports

Source: (Abs.gov.au, 2017)

Furthermore, one of the major factors determining the beef industry in Australia is tight supply (Cox, Zhou and Choi, 2013). Due to the supply shortage, the sales of the beef have been declined in the domestic market. In terms of beef production, reports published in 2015-16 confirmed that approximately 2.34 million tonnes cwt of beef and meat were produced in Australia (Ams.usda.gov, 2017). On the basis of the figures, Australia was the seventh largest beef producing countries in the world.

Figure: Top Ten World Beef Exporters (2016)

Source: (Ams.usda.gov, 2017)

In terms of beef exports, during 2015-16, Australia was identified as the largest beef exporting country by producing 4% of the entire beef supply around the globe (Ams.usda.gov, 2017). The total value of the beef and veal exported by Australia was worth $8.5 billion in 2015-16 financial years (Abs.gov.au, 2017).

However, the Australian domestic market faces a significant shortage of beef due to the high amount of export in the Asian markets. For instance, the new import policy of the Indonesian Government in 2016 makes it important for the Australian exporters to transport one female cattle out of every six cattle (Curtain, 2017). Furthermore, the extreme rain in the top end has become a major challenge for the Australian exporters in order to locate available stock for sale (Curtain, 2017). Therefore, a shortage of supply of livestock and beef can be highly evident in the local market. It is important for the Australian government to take care of the beef production need in the domestic market in order to maintain stability in the Australian beef market. The falling demand for Australian Beef has directly impacted the price of livestock in the global market. On the other hand, the shortage of stock in the domestic market has led to a peak rise in the beef price. Hence, market instability can be seen in the recent time in the Australian beef industry.


The Australian government need to take necessary measures in the form of fiscal policies in order to safeguard the beef industry. For example, subsidies can be provided to increase the production of the beef industry (Sun, Hyland and Bosch, 2014). Additionally, a wall must be drawn over the quantity of export by using the taxation policy over the export quantity. For example, Australian government can promote tax free export up to a particular quantity (Widiati, 2015). The export over the mentioned quantity can be liable for a higher amount of taxation. Furthermore, the Australian government can introduce price flooring strategy and exclude the middlemen from the supply chain system to maintain stable price in the market.

Evidently, the above discussion has verified that recovery in the US beef industry and new policy measures of the US President may create significant challenge for the mean industry in Australia. On the other hand, the Trans-Pacific Partnership (TPP) and ASEAN partnerships must be reviewed and restructured by the Meat and Livestock Australia to support the industry in the long run. Furthermore, the event of Brexit may bring new beef exporting opportunities for Australia as the political event will provide better access conditions in Britain. Conclusively, price war, vicious market competition, and supply shortage issues can be controlled if the Australian export and trade policies can be orderly placed.

References

Abs.gov.au. (2017). Livestock and Meat, Australia, Jun 2017. [online] Available at: [Accessed Aug. 2017].

Ams.usda.gov. (2017). Beef | Agricultural Marketing Service. [online] Available at: [Accessed Aug. 2017].

Cox, R., Zhou, Z. and Choi, J. (2013). Beef supply chains in Australia. 3rd ed. Orange, NSW: Asian Agribusiness Research Centre.

Curtain, C. (2017). Key challenges in store for live cattle export industry's 2017. [online] ABC Rural. Available at: [Accessed Aug. 2017].

Gillard, P. and Monypenny, R. (2016). A decision support approach for the beef cattle industry of tropical Australia. Agricultural Systems, 26(3), pp.179-190.

Locke, S. (2017). The key uncertainties for Australia's beef industry in 2017. [online] ABC Rural. Available at: [Accessed Aug. 2017].

Sun, D., Hyland, P. and Bosch, O. (2014). A Systemic View of Innovation Adoption in the Australian Beef Industry. Systems Research and Behavioral Science, 32(6), pp.646-657.

Widiati, R. (2015). Developing Beef Cattle Industry at Smallholders to Support Beef Self-Sufficiency. Indonesian Bulletin of Animal and Veterinary Sciences, 24(4).

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