Beef industry in Australia Report

Introduction

The beef industry is the biggest agricultural activity in Australia. Moreover, it is the second biggest beef exporter after Brazil internationally. Every state and territory of Australia sustains breeding of cattle in an extensive scope of climates.

The Australian “small population means that consumption is low, which allows Australia to export a significant volume of beef each year mainly to Korea, the US, and Japan, while cattle production in the country covers a region of more than 200 million hectares” (Hammond 2006, p.190).

The beef industry in Australia achieved an advantage following the detection of BSE (mad cow disease) in Japan, Canada, and the US, since Australia is without the disease. Contrary to breeding systems in different parts of the globe, cattle in Australia feed on pasture as the chief source of food (Bell et al. 2011).

The aim of this analysis is to assess the beef industry in Australia, find opportunities, and threats, and recommend ways to better the industry. The beef industry in Australia encounters several challenges like increasing salinity, vegetation control, and degradation of soil among other internal and external factors.

The execution of the recommendation practices could necessitate reaction to particular subjects. In degraded regions, re-vegetation could help, or a modification in farming method. This paper discusses the analysis of the industry and recommends ways to reduce emanating threats.

Industry analysis

At a domestic strategy stage, the macroeconomic as well as the regulatory environment might have a powerful impact on factors of competitiveness of the industry. Domestically, macroeconomic strategy could have an impact on input costs courtesy of its influence on several aspects, for instance, rate of interest and inflation.

Worldwide, macroeconomic strategy could have an impact on real exchange rate. A broad range of other environmental factors may affect the effectiveness of the industry.

Environmental factors that are likely to result in failure or success of the beef industry in Australia are the ones that affect transport, processing, and communication systems as well as the ones that affect access to information and innovation.

For the beef industry, the chief primary resource is land for grazing. In the entire land limitation, competition from other farm animals (Dairy industry), crops (cotton and horticulture industry), and non-agricultural activities is crucial (George et al. 2009).

The beef industry in Australia encounters great competition from South America in markets like Canada and Korea. Brazil stands as the leading exporter of beef in the world and the second major beef producer following the US.

The beef industry in Brazil has grown powerfully in the last decade, with production rising by 36 per cent to 9 million tonnes in year 2009. Over the same period, exports have rose at a much quicker rate, rising by 227 per cent to 1.6 million tonnes.

The sturdy growth of the beef industry in Brazil has been the outcome of significant new venture in infrastructure and cattle breeds, which is anticipated to promote growth in the near future. The beef industry in Brazil has a powerful competitive level in international markets where it has access, mainly due to its cheaper cost arrangement.

Distress concerning foot-and-mouth disease in several provinces in Brazil has affected the export capacity of Brazilian beef (Ferraz & Felício 2010). Presently, Brazil does not compete with Australia for beef export to Korea, the US, and Japan owing to its foot-and-mouth disease risk.

However, if the beef industry in Australia were to spread out its presence to other markets, mainly in Russia, the Middle East, and Asia it could encounter considerable rivalry from Brazil.

India ranks as the third major veal meat and beef exporter after Brazil and Australia. Supplies from the United States’ beef industry could augment with more animals being slaughtered after a drought. Exports from the beef industry in India might make Australia struggle to capture a decent allocation of mushrooming new markets.

India, which is one of the most densely inhabited and vegetarian country, witnessed 21 per cent augment in beef production from 2000 and possesses a 63 million head cattle (judge against 26m of Australia).

Beside additional beefed up export rivals like Brazil, New Zealand, and the US, India plans to aim rising close markets with mounting victory in a period of five years.

As the number of inhabitants in South East Asia is probable to rise by over 32 million people in the next three years, it marks the escalating competition that the Australian beef industry will encounter in supplying these thriving markets.

In accordance with Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES), beef exports are already tilted to decrease due to intensifying export competition as well as more local cattle existing for slaughter.

In accordance with the Agricultural and Processed Food Products Export Development Authority (APFPEDA), buffalo meat symbolised 86 of the total exports from animal products in 2011.

The major markets for buffalo meat from India are the Philippines, Vietnam, Malaysia, and Saudi Arabia. In the aforementioned markets, Australia receives stiff competition owing to the demand of buffalo meat (Kandeepan et al. 2010).

PESTEL analysis

Political and Legal

The majority of Asian nations are open to trade but a number of these nations safeguard their farmers with none closed to Australian beef (save for Burma and Korea) and thus tariffs are normally enforced to Australia at rates similar to those of competitors like the US.

Nation obligations are stern in various cases (for instance Japan and Indonesia) but Australian Quarantine and Inspection Service (AQIS) impose an authorisation structure for meat export, where the entire meat has to be certified by a supervisor to be allowed to leave the nation, thus guarding the industry (Nederveen & Dasgupta 2009).

Procedurally, every Asian nation (apart from the abovementioned), have related import systems, there exists traders in Australia operating in every Asian market.

China necessitates traceability, initially a market locked to non-incorporated meat-works. Requirement ordered that they start their market, and as a result can export if the record of the body is traced to a China-endorsed abattoir.

Economic

In terms of economic aspects, Asia can be split into strata as shown below:

• Developed: Singapore, Hong Kong, and Japan
• Newly developed: Thailand, Taiwan, and South Korea
• High potential: Malaysia, India, China, Vietnam, and Indonesia
• Developing: North Korea, Burma, and Cambodia

Resemblances in Asia comprise wet markets, rising hotel industry, restaurants, and recently started supermarket chains. Every major nation has a rising hotel sector, with numerous foreign dollars originating from tourism and business voyage.

There is also a growing domestic dollar obtained from the beef industry also (McSweeney & Rayner 2011). The hotel business marked the initial point through which Australian meat got into the majority of Asian markets, instigated by a few distributors, who bought from traders as well as directly. The stride that followed is through the restaurant industries.

With respect to general economic climate, recent years have witnessed noteworthy fluctuations in prices of products and more so beef, cereals, and dairy products. Even as the international economy is going through a phase of uproar owing to a mixture of unpleasant aspects, the prospects for agricultural products on international markets are however promising.

Increasing population, better living standards and varying nutritional patterns, mainly in Asia, are all causal factors of higher food demand (Cullen & Parboteeah 2009).

With their scale of function and cheap production charges, the beef industry in South America carries an actual threat to Australian producers, if permitted free access to European Union markets.

Current developments (such as production restrains and export limitations) in conjunction with future revenue growth, mostly in Brazil, are possible to reduce that threat to some extent.

Social

With regard to social aspects, Asians are famous for being social diners; therefore, the restaurant business in Asia is much more varied and significant as compared to the west. The cultural practices of the Asians in many nations dictate, to some extent, the significance of ‘face’ that is most simply achieved via the dinner habits.

Australian red meat is indubitably prevalent in these social occasions and thus considerably contributing to the growth of the beef industry in Australia (Peters et al. 2010). Levels of education are still extensively diverse in Asia; however, food education as well as teaching of chefs is most appropriate to this study.

Cooks and chefs in Asia are habitually trained in western ways of cooking, but still a lot of work requires to be done in teaching the food-service sectors the advantages of a wider-variety of products.

Technological

Asia still differs outrageously in technological developments. China forms an excellent instance of the whole region with cities at the coastal regions competing with the US and Australia with respect to telecommunications, accessibility and affordability of expertise, and the application of personal computers, while interior provinces worsen in the accessibility of technology in uneven relationship to economic affluence, which decreases as we shift far from the coasts.

Likewise, as technology compares to economic prosperity, so too does the use of imported Australian meat, and its accessibility.

Since the Asian ports in China, Japan, Singapore, Thailand, Malaysia, and Vietnam are capable of handling refrigerated, containerised consignment, and present appropriate cold-chain support for delivery of the product, expertise makes it achievable and inexpensive for the supply of Australian beef product in coastal regions.

The coastal areas are as well the regions of highest economic development and trade, and thus requirement for meat products, which in most instances are not available in high sufficient number or quality locally (Hammond 2006). The same case applies to the inland.

Environmental

With regard to Climate Change, Australia supports the objectives concurred in 2007 by the Heads of State and Government at Spring European Council and the European Union package on Climate Change and Energy Security (CCES) concurred in 2008.

It has as well been consented that the European Union target will augment to a decrease of 30 per cent in the occasion of a global accord on CCES arrived at in Copenhagen in 2009. The projections in 2012 “estimate that emissions in Australia are probable to bear averaged 575 million tonnes of carbon dioxide (CO₂) equivalent each year” (Keating et al. 2010, p. 108).

In a bid to attain total emissions target in Australia of a 5 per cent decrease on 2000 levels by 2020, the country encounters an abatement hardship of 155 million tonnes of carbon dioxide in 2020.

Due to the carbon pricing method at hand, the net emissions of Australia are planned to be restricted to 537 million tonnes of carbon dioxide in 2020 and 396 million tonnes of carbon dioxide in 2030 (derived from total 2020 and 2050 targets of Australia).

The mechanism is the way through which Australia will achieve its greenhouse gas emissions decrease targets (Browne et al. 2011). While study in this area is in progress, it is obvious that the attainment of Australia’s target offers an alarming challenge.

SWOT Analysis

Strengths

• Australia has almost total sickness free status

Australia boasts the world’s lowest standing for Bovine spongiform encephalopathy (BSE), normally called mad cow disease. Additionally, Australia is mainly free of foot and mouth disease and has no major sicknesses

• Availability of latest research, innovations, and technology
• Geographically Australia is gainful as is near Asia while all present competitors are on the opposite side of the world
• Hazard analysis and critical control points (HACCP) and AQIS imposed minimum values are quite thorough, as each piece of meat exported has to be allowed by AQIS (Pelle 2007). This aspect leads to high quality and reliable product that is essentially certified to be safe, indirectly, by the government of Australia
• Process and quarantine recognised internationally

The Australian beef industry enjoys unrestricted access to all markets

• Proficient (mainly unguarded) production due to good surroundings, first rate capital and practices

Weaknesses

• Costly land, labour costs, and production that bring about high pricing

These elements make it difficult to compete with other countries exporting at lower costs (Keating et al. 2010)

• Depends on the environment as well as climate, which are both not constant in Australia
• Short of premium representation in some countries, thus in a number of markets Australian meat is a product, and pricing floats consequently
• The beef industry is itself is exposed to world pricing
• The industry is potentially affected by increasing oil prices
• Unguarded industry

Susceptible to (particularly) the United States product when competing

Opportunities

• Chefs from Australia have an opportunity to teach the Asians on making use of Australian product
• For Singapore, the sub-continent, and Malaysia certification is simply made, the majority of export plants are purely Muslim Kill.

A niche requirement in Asia

• Geographic closeness leaves Australia beneficial against hardening import obligations

For instance, three month requirement by Indonesia (Keating et al. 2010)

• Simple for trade contact, and for customers to draw closer and visit
• To more develop on the hygienic and green representation, Asians consideration for Australian meat and beef products, likely cultural resemblance for conducting business in Asia
• Effortlessness of production in Australia provides itself to

• Difficult nation and commercial obligation
• Supply for the Asian preferences like both grain as well as grass fed

• Free Trade Agreement with Singapore, dialogues for Malaysia, China, and Japan that will persuade importers to turn to Australia.
• International food chains like Mcdonalds that support source of their beef as a business point
• Opportunity as a supply of labour (guest employees) for the Australian beef industry
• Rising prosperity, boosted intra-continental tourism, and accessibility by visitors for hotel business, increased revenue for purchasing foreign products for local consumption (Keating et al. 2010)

Threats

• Asians could sign Free Trade Agreements with the US and South America that eliminate Australia
• Likely threat from China, rising production of beef and sheep, and exporting
• Red meat is not in line with the Kyoto protocol
• The US competing harder to regain markets like Japan and Korea (Nelson 2009)
• When it gets over disease setbacks, South America might enter a lot of Asian nations

A great workload goes to the beef industry in Australia to major on the external environmental opportunities and find ways of reducing and eliminating negative external and internal environmental threats for it to maintain a leading and thriving status.

Failure to do so could cause the progressive decrease in effectiveness of the beef industry (Pethick et al. 2011). Currently, the beef industry has shown a readiness to react. The greatest challenge will be to deal with the effects of change.

Strategy Recommendations

The major environment associated recommendations of the strategic plan exclusively involve the requirement for better grazing methods and additional on-farm land administration policies (Verbeke et al. 2010). The aims of these strategies should focus at:

• Attaining noteworthy developments in efficiency and natural supply sustainability pointers through advanced grazing and other administrational strategies
• Decreasing and reversing the effect of land and water deprivation on the beef industry through proper cultivation and grazing techniques. These can be copied from other well performing nations like Brazil
• Satisfying the expectations of the society by adopting practices for the water as well as land management

The beef industry in Australia is a rural industry encountering several developing and growing environmental hardships. The challenges are inevitable, as the industry uses land resources.

The increasing salinity, vegetation control and soils matters should be taken through assessments of the impacts that the beef industry has on broader landscape practices. The implementation of recommended practices could necessitate development to react to regionally particular subjects and to emerging subjects.

In a number of the more poorly degraded regions, re-vegetation could be needed, or at the extremely best, a modification in farming method (Verbeke et al. 2010). The modifications adopted should be established by the degradation happening.

Meat and Livestock Australia (MLA) should carry out a Producer Instigated Research and Development (PIRD) plan to satisfy the beef industry’s demand for better producer participation in research and development.

In line with this plan, MLA can source finances to fund producers sufficiently with a project aimed at bettering the effectiveness and productivity of their farm business through the necessary research and development (Keating et al. 2010).

These researches could look at ways of reducing cost of production in a bid to lower cost of the product and satisfactorily compete with countries like the US who offer cheap beef products. Additionally, the research could seek to achieve Australia’s greenhouse gas emissions decrease targets and ensure unchanging climatic conditions.

Conclusion

The beef industry is the leading agricultural activity in Australia in addition to the country being the second biggest beef exporter after Brazil, globally. Cattle production in Australia makes use of an area of above 200 million hectares.

The industry encounters a number of challenges like escalating salinity, vegetation control, and degradation of soil amid other internal and external factors. Besides the challenges, the industry is bestowed with opportunities such as being free of disease and geographic nearness to its markets in Asia.

Among other recommendations, financing research and development, re-vegetation, and a modification in farming method could help eliminate threats and ensure that the beef industry in Australia maintains a leading status.

Reference List

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Cullen, J & Parboteeah, P 2009, International Business: Strategy and the Multinational Company, Routledge, London.

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Kandeepan, G, Anjaneyulu, A, Kondaiah, N & Mendiratta, S 2010, ‘Quality of buffalo meat keema at different storage temperature’, Journal of Food Science, vol. 4 no. 6, pp. 410-417.

Keating, B, Carberry, P, Bindraban, P, Asseng, S, Meinke, H & Dixon 2010, ‘Eco-efficient agriculture: Concepts, challenges, and opportunities’, Crop Science, vol. 50 no.1, pp. 107-109.

McSweeney, P & Rayner, J 2011, ‘Developments in Australian agricultural and related education’, Journal of Higher Education Policy & Management, vol. 33 no. 4, pp. 415-425.

Nederveen, P & Dasgupta, S 2009, Politics of Globalisation, Sage, New York.

Nelson, C 2009, Import/export: How to take your business across borders, McGraw Hill, New York.

Pelle, S 2007, Understanding Emerging Markets: Building Business BRIC by Brick Response Books, India.

Peters, G, Rowley, H, Wiedemann, S, Tucker, R, Short, M & Schulz, M 2010, ‘Red meat production in Australia: Life cycle assessment and comparison with overseas studies’, Environmental science & technology, vol. 44 no. 4, pp. 1327-1332.

Pethick, D, Ball, A, Banks, R & Hocquette, J 2011, ‘Current and future issues facing red meat quality in a competitive market and how to manage continuous improvement’, Animal Production Science, vol. 51 no. 1, pp. 13-18.

Verbeke, W, Van Wezemael, L, De Barcellos, M, Kügler, J, Hocquette, J, Ueland, Ø & Grunert, K 2010, ‘European beef consumers’ interest in a beef eating-quality guarantee: Insights from a qualitative study in four EU countries’, Appetite, vol. 54 no. 2, pp. 289-296.