Beef producers in Australia are getting record prices at present, with Meat and Livestock Australia (MLA) reporting the equivalent of €4.20/kg for grain fed cattle in Queensland last week, the equivalent of 45c/kg more than this time last year.

The main reason is that Australia is in a herd rebuilding phase following drought in 2018/19, the second of the past decade.

It means that MLA is forecasting the total cattle slaughter for 2020 will be 7m cattle, the lowest figure this century. It is a similar picture with the size of the cattle herd, which is below 25m, again a first this century.

The EU is a minor market for Australia because of tariff barriers

Despite this, Australia is expected to still be the third largest beef exporter in the world this year after Brazil and the USA.

In the 12 months ending 31 October, Australian beef exports were 1.1m tonnes, a 9% drop compared with the same period in 2019.

After a prolonged period of growth, exports to China have fallen by 10% to 237,000t. The suspension of five large factories by China has no doubt contributed to this drop.

Japan is now Australia’s largest export destination, taking 266,000t for the 12 months ending in October while the US is at 238,000t.

Relevance for Irish farmers

Australia, like Ireland, is a major beef exporter and is a direct competitor in global markets, particularly the US and China where Irish beef exports are getting established.

The EU is a minor market for Australia because of tariff barriers. These could soon be reduced, as the EU and Australia are in a trade agreement negotiation.

Similarly, Australia is in separate negotiations with the UK for a trade agreement.

That deal will almost certainly involve considerable access for Australian beef and sheepmeat, as it has already been identified by the UK as an area where it could offer an attractive proposition.

If such a deal is concluded between the UK and Australia, it would mean serious competition for Ireland in our main export market.

Traditionally, Australian beef prices trade up to 50c/kg below Irish prices, but with current prices at least 50c/kg better than Irish, then Ireland would still be competitive in the British market, even if it was opened up to Australia with a favourable trade deal.