Free trade agreement negotiations between Australia and China are going well in Beijing, according to local reports. Another potential agreement between China and Australia was leaked over the weekend as China looks likely to allow the shipment of live cattle from Australia. Current rules do not allow this.
This would be a big deal for northern Australian beef cattle farmers who are currently limited to exporting live cattle to Indonesia only. Having just one customer can put downwards pressure on pricing. Beef farmers elsewhere in the country would also notice less competition from northern beef if more was exported to China, according to Paul McMahon, managing director of SLM Partners. SLM is an investment manager with beef cattle properties in Queensland and New South Wales in east and southeastern Australia.
While a live cattle export deal would not have a direct impact on SLM or other cattle producers that are not in the live export business, the domain of northern producers, it would still be a positive move.
“Indirectly it will help SLM as it will mean that fewer animals from the north end up in the eastern or southern markets,” said McMahon. “In the past, when the Australian-Indonesian live export market was cut off, producers in the north spent lots of money trucking cattle south to sell in those markets, which depressed prices. So, the new China live export deal will act to maintain higher prices throughout the country.”
A free trade agreement, which would remove the 25 percent tariff on chilled or frozen Australian beef imports and the 15 percent tariff on Australian lamb imports into China, would benefit all meat producers because it would increase overall demand for Australian meat and support stronger cattle prices in Australia, added McMahon.