Two recent events have highlighted the competitive challenge faced by the Australian beef industry. Anyone lulled into thinking that the current high cattle and beef prices will persist over the longer term might need to reconsider that opinion, and quickly!
The 'rotten beef' scandal that emerged in Brazil in mid-March may have led many in the Australian industry to breathe a sigh of relief, and to assume that the event was confirmation that while Brazil might challenge Australia in terms of the volume of beef it exports, Australia's superior biosecurity and food safety standards will continue to ensure Australian beef is always preferred in higher value markets. This has certainly been the case in the past when outbreaks of foot and mouth disease in Brazil have resulted in international markets refusing to grant market access to Brazilian beef for extended periods.
However, in the case of this most recent development, it seems that the fallout for the Brazilian industry in global markets will be shortlived. As would be anticipated, China immediately suspended imports from Brazil, while the EU and South Korea imposed some limited restrictions on specific Brazilian beef processing plants. However, several weeks after the initial reports surfaced, it seems that action taken by Brazilian officials, and a broader recognition that the problems is confined to a small number of processing plants, has meant that Brazilian beef exports have been largely unaffected. Most major markets, including China, Egypt, Hong Kong and Russia have removed trade restrictions, or simply increased inspection of Brazilian beef imports. A number of EU countries have imposed more stringent inspection or testing requirements, but will continue to import Brazilian beef and chicken meat. The Brazilian industry anticipates that beef exports will be largely unaffected, and the Brazilian Government appears to have moved decisively to deal with the problem, to the satisfaction of international markets.
The rapid recovery of market access that Brazil has achieved in response to this incident highlights the increasing sophistication of the Brazilian beef industry. While in the past the Australian industry may have felt secure in the knowledge that its biosecurity and food safety standards were considerably superior to those of Brazil, this event shows that this is no longer the case. It serves as a sharp reminder that global beef markets are becoming increasingly competitive, and that the Australian industry cannot rest on its assumed superiority in quality and safety.
Reinforcing this message is the news over the past week that Impossible Foods, a silicon-valley startup that produces plant-based meat substitute hamburger patties, is undergoing a major expansion and will soon have the capacity to produce five million kilograms of 'meat-alternative' hamburger patties per year. The company has a 'whos who' list of celebrity investors including Bill Gates, and its products will initially be targeted at premium consumers who are most likely to be concerned about environmental and animal welfare issues associated with the beef industry.
The clear message for the Australian beef industry from both these developments is that there is an urgent and continuing need to improve biosecurity, product safety and quality, and ultimately industry productivity, in order for the sector to remain profitable in the future. To achieve this will require coordinated efforts throughout the entire supply chain, and the rapid emergence of digital technologies, objective carcase data and automated processing provides a major opportunity for this to occur along all parts of the supply chain.
Getting the industry to recognise the extent of emerging competitive challenges and to take decisive and coordinated action in response remains a major challenge.