Australia's Prime Minister has announced a desire for a 'no surprises' relationship with China ahead of his highly-anticipated first official state visit to China since 2016.
For the most part that desire for stability and predictability appears to be materialising. Australian coal, barley, and now wine exports are beginning to see trade roadblocks removed, but one critical industry remains unresolved - Australian meat exports.
As bilateral ties appear to be warming up, the Australian meat industry is hoping to see residual trade impediments applied by China removed. Removing abattoir licence bans for the ten meat exporting establishments and recovering Australia's pre-COVID meat export trade and market share in China will surely be on the agenda when senior leaders meet very soon in Beijing and Shanghai.
Our meat industry also needs a no surprises relationship with China. If there are problems with Australian meat, we want exporters and our government agencies to be warned about the specific issues before any sudden decision is made.
To use the Rugby World Cup Final as an analogy, if there are real problems we'd expect a referee's warning, followed by a yellow card while an independent Television Match Official reviews the decision - in this case the World Trade Organisation.
For infringements that are so serious, a red card can be issued but with a timely and transparent process for rectification and reinstatement of export licenses.
In 2018, the Australian Meat Industry Council's chief executive officer and I spent significant time in China working with Chinese Import and Agricultural regulators and various agencies to understand and negotiate this very important "no surprises" industry and regulatory consultation process.
Beyond the reinstatement for the ten processors, this needs to be the next major project for Australian government and industry together.
Things are looking up.
Despite the bilateral issues, China has quietly but surely regained its position as Australia's top beef export destination in 2023, for the first time in three years. As of September 2023, total beef and veal exports reached 98,712 shipped weight tonnes, marking a 40 per cent increase compared to September 2022.
This is a big deal for Australia. As with most things China, the numbers are enormous as it is the world's largest beef and sheep meat market (by imports).
The scene has been set for Australia to further accelerate beef exports in the coming decade as rising incomes, a recent period of pork shortage due to African Swine Fever and greater consumer focus on nutrition to boost immunity against COVID-19 has seen the Chinese domestic red meat supply unable to keep pace with consumption growth.
Australia is well-positioned to meet this higher demand due to comparative advantages in the production of livestock cattle, our safe biosecurity and meat processing quality standards, Australia's brand recognition and relative geographical proximity to China.
But it's not a return to the status quo.
There are a range of serious challenges to the future of Australian meat exports to China, many of which are driven by geopolitical uncertainty.
While our bilateral relationship is warming, we are by no means out of the freezer. Only the most inexperienced or naive exporter could hope for a smooth and easy return to the pre-COVID China meat export trade growth given the enormous geopolitical, geo-economic changes that have occurred in the past four years. These well documented bilateral disagreements have created permanent differences between our countries.
Additionally, Australian meat isn't the only game in town. Since about 2013, Chinese imports of beef from Latin America have exploded, from less than 100,000 metric tonne in 2013 to over 1.5 million MT in 2021. These increases have mirrored growth in China's imports of grains, oil seeds and resources goods from the LATAM countries, and likely reflects closer geopolitical alignment.
Brazil's rapid reinstatement following their BSE ban earlier this year suggests that China is eager to keep access to its number one beef source and aligned partner and will move to solve sanitary/phytosanitary issues with its geopolitical partners quickly.
This contrasts with the more than three years that some Australian abattoir operators have been waiting to resume exports to China, and over six years some have been waiting to gain even initial access to the market.
Another aspect complicating Australian meat exports to China is domestic food security. The country aims for food self-sufficiency and has a large cattle herd of its own, approximately 97.2 million head in 2022, forecasted to increase by 2.7m by 2026.
Longer-term Chinese policies suggest greater domestic self-sufficiency and for trade ties to be limited to like-minded partners. In the case of beef, this may mean that Australian imports are gradually phased down in favour of domestic beef and imports from more aligned countries in LATAM.
China will remain a key beef export market for Australia, with strong demand forecasted until 2050 and beyond.
The China - Australia Free Trade Agreement allows for further market access improvements in 2023 and 2024 and makes our meat more competitive with the US and LATAM.
However, geopolitical uncertainty, and a challenging bilateral relationship, will mean that Australian meat exporters need to stay on their toes. We need to ensure we understand what is happening in China, tracking current and future geopolitical and macro-economic trends, and how they could affect the sector.
We need to know what might trigger another cooling down of the bilateral relationship in the future and how these shifts will affect us, putting action plans in place to respond with speed and agility.
Australian industry will continue to work very hard with our government agencies to take as much 'surprise' out of our meat export relationship with China, because that is how we will best protect and strengthen our market share with Chinese importers and regulators.