Australian Beef to Compete With Brazil, India as Demand Surges

Australia, the largest beef exporter, faces “fierce” competition from Brazil, India and the U.S. to meet an expected surge in demand, boosted by rising consumption in emerging markets, said an industry group.

“Demand is set to grow increasingly over the next five years, vastly outstripping the globe’s capacity to supply,” said Scott Hansen, managing director of Meat & Livestock Australia. Global consumption may climb 24 percent by 2020 from 64.5 million metric tons in 2011, the producer-owned group said at a conference in Canberra today.

Rising incomes and growing populations in emerging markets are fueling demand for farm products including proteins, helping push global food costs 1.9 percent higher in January, the most in 11 months, according to the United Nations. The Standard & Poor’s GSCI Agriculture Index (SPGSAG) of eight commodities has advanced 1.5 percent this year.

“We expect to continue to see fierce competition from the likes of Brazil and India, and from the U.S. and New Zealand in some of our more traditional marketplaces,” said Hansen. “Brazil’s not only well-placed to meet demand growth in South America, but to increase its presence globally.”

Exports from Brazil this year may top an earlier forecast, a unit of the U.S. Department of Agriculture said yesterday. Shipments may be 1.394 million tons, up from a USDA estimate of 1.375 million tons, said the Foreign Agricultural Service.

Indian Exports

India is poised to be the third-biggest beef and veal meat exporter this year after Australia and Brazil, with shipments of about 1.275 million tons, according to USDA data. Supplies from the U.S., ranked fourth by the USDA, may increase as more animals are slaughtered following a drought, Hansen said.

Buffalo meat represented 86 percent of India’s total animal-product exports in the year ended March 31, 2011, according to the Agricultural and Processed Food Products Export Development Authority. India exports buffalo meat mainly to Vietnam, Malaysia, Egypt, Saudi Arabia and the Philippines.

Demand for U.S. exports will climb in the medium term because of increasing consumption in emerging markets and the dollar’s decline, Donnie Smith, the chief executive officer of Tyson Foods Inc. (TSN), said Feb. 24. Global demand for protein may grow 1.8 percent to 2 percent for at least the next five to seven years, he said.

Cattle futures for April delivery gained 0.3 percent to $1.26175 per pound on the Chicago Mercantile Exchange at 3 p.m. Singapore time. They dropped 2 percent yesterday to settle at $1.25775, the biggest decline since Dec. 5. Prices have increased 11 percent in the past year.

Emerging Markets

Australia is seeking to expand sales in emerging markets to boost overseas shipments as Japan considers easing trade curbs on U.S. supplies imposed after an outbreak of mad-cow disease. Japanese imports of U.S. beef shrank to almost zero in 2004, from 298,039 tons in 2003, after the country joined South Korea and China in banning U.S. supplies after the discovery of bovine spongiform encephalopathy.

Shipments from Australia to Japan may decline 2.4 percent in 2012-2013 as the country sources supply from the U.S., the Australian Bureau of Agricultural and Resource Economics and Sciences said in a report yesterday. Sales to South Korea may fall 2.1 percent amid increased competition from U.S. and Canadian supplies, it said.

Total beef and veal exports from Australia may still increase 1.6 percent to 970,000 tons in the year starting July 1, as production gains on heavier carcass weights, the bureau said.

To contact the reporter on this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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