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Caution urged over getting ‘over-excited’ about lamb prospects in China, India

by Fiona Myers, 10 March 2017

BURGEONING numbers of middle class people in India and China could offer opportunities for boosting sheep meat exports.

But Meat & Livestock Australia area managers for both countries have cautioned against thinking that these markets will emerge overnight.

MLA’s area manager for China Michael Finucan told a global sheep meat forum in Melbourne yesterday that China was a “great and growing market.”

In a country where pork meat is king, Mr Finucan said Chinese people ate an average of about 3kg of sheep meat each year.

This, he said, was small in terms of the protein market.

“There is a lot of hype around China but it needs to be put into perspective,” he said.

“This is a market where consumers are not attuned to spending money on high quality proteins.

“China is a long-term game but we want to grow the market and the consumer sector is developing fast and the dynamics of those consumers are changing.”

But Australian sheep meat did have a strong reputation for quality, safety and superiority of product.

And while he sees potential for more Australian lamb and mutton to go into China, especially chilled product, there were factors limiting this.

One was the lack of Australian abattoirs which were accredited to export chilled sheep meat into China. Just two tonnes of chilled lamb was sold into China last year with the five-year average just 15 tonnes.

There are 12 abattoirs which are accredited to sell chilled red meat into China, but only one, in Western Australia, is accredited to sell chilled sheep meat.

“The Chinese registration process is laborious,” Mr Finucan said.

So most of the sheep meat going into China at the moment is frozen, with 67 percent breast and flap cuts.

In the 12 months to November, Australia exported $223 million worth of sheep meat to China, with lamb comprising 64pc and mutton 36pc.

Nearly 60,000 tonnes were exported in the same period, with frozen lamb comprising 66pc and frozen mutton 34pc. This represented 36pc of all sheep meat imports into China.

There was also the challenge for Australian exporters of competing against Chinese sheep meat produced domestically, especially at the lower price point of the market.

Mr Finuncan said it was important for Australia to overcome market access issues, and to grow awareness of lamb as a high quality protein to see growth in the market.

“There is a great lack of knowledge on how to use lamb and at the high end, it is mainly ex-pats or Chinese people who have lived overseas that like to eat lamb.

“We would like to see more value for lamb in China and a more sophisticated market.”

There was a similar cautionary note given by MLA area manager for south-east Asia Andrew Simpson who said while the middle class was growing in India, it was a highly protected market.

“There is a village economy in India where farmers produce a small number of sheep and then sell them locally for about $4/kg,” Mr Simpson said.

“When we sell sheep meat into India, we are competing against this price and then add a 30pc tariff to that.

“You are then also competing against other proteins – chicken at $1.20/kg.”

Last year, Australia sent just 29 tonnes of sheep meat to India.

Mr Simpson said this was the amount directly exported to India, but that Australian sheep meat could end up in India but enter through the Middle East.

“The India market is hard work,” he said, “but processors and exporters should trust their instincts.”

“The first container of sheep meat that is sent to India is as important as the ten thousandth.

“We need to understand who we need to work with and let’s time our race.

“But I don’t think there is a short-term win in India around the corner.”

 

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