China’s demand for beef and sheepmeat imports grew in 2023, but the price paid was dramatically lower per tonne than the previous year.
If value was the metric used to assess performance instead of volume, then China’s beef imports fell by almost 30% and sheepmeat fell by almost 20%.
With the International Monetary Fund (IMF) forecasting that China’s economy will grow by 4.6% this year (falling back from 5.2% last year), prospects for beef and sheepmeat exports to China are more uncertain than they have been at any time over the past decade.
Why does it matter?
Irish farmers may look at the 2,000t of beef China imported from Ireland last year but no sheepmeat and form the opinion that this doesn’t really matter to us.
After all, almost half our beef exports went to the UK and most of the rest went to EU countries last year, while sheepmeat exports followed a similar path, with a different breakdown in volumes to individual European countries.
However, what happens in China has the potential to have a serious impact on the global beef and sheepmeat trade.
It buys almost one quarter of all beef traded internationally and one third of all sheepmeat, so if there is any cooling in demand from that market, the knock-on effect will be global.
After a period of herd and flock rebuilding, Australian beef and sheepmeat exports surged in 2023, with beef exports up almost 230,000t or 27% on the previous year and sheepmeat exports up over 107,000t or 25% compared with 2022.
A significant amount of this extra volume was exported to China, with beef volumes increasing to 206,000t, a 30% increase compared with the previous year, while sheepmeat exports increased to 165,000t - a 50% increase on the volumes exported to China in 2022.
China is a relatively convenient market for Australian exports, though the extra Australian supplies meant that China’s importers were able to secure a lower price.
Australia is a major exporter of beef and sheepmeat across Asian, North American, Middle East and north African markets. Europe and the UK have been tiny markets up to now, as they have been protected by high tariffs.
However, all this changed last year with the UK-Australia trade deal coming into effect at the beginning of June 2023.
Ultimately, the UK will accept unlimited quantities of Australian beef and lamb tariff-free and Australian exports to the UK increased significantly in the second half of 2023, though from a very low base.
Beef volumes for 2023 were 2,406t, which is similar to the amount Ireland exported to China and minuscule in the context of Australia’s total beef exports of 1.1m tonnes, but it does represent a five-fold increase on the previous year.
Sheepmeat exports were much more substantial at 12,958t in 2023, which represents a 50% increase on 2022 volumes.
Location and logistics mean that Australia can never replace Ireland as the first-choice supplier of beef and sheepmeat for UK importers. However, it will grow market share over the coming years and the extent of that growth will be determined by the strength or weakness of Australia’s current export markets.
If China, in particular, was to face a downturn, then the UK is ready to come into play for significant volumes.