Trade

Live exporters, processors welcome ChAFTA

Sheep Central, November 17, 2014

The Australia-China Free Trade Agreement will deliver immediate benefits to Australia’s dairy heifer export trade, the chairman of the Australian Livestock Exporters’ Council, Simon Crean said this afternoon.

In a statement welcoming the deal, Mr Crean said the agrement will see the current 10pc tariff on live cattle and sheep will be eliminated over four years.

“As a former Australian Trade Minister engaged in the negotiations for several years, I wholeheartedly welcome the agreement and congratulate the Government and Andrew Robb on their efforts to bring the deal to a conclusion,” Mr Crean said.

“It shows that bipartisanship and persistence can deliver good outcomes for the nation.

“Across the board, Australia is poised to enter a new era of trading relations with China. I particularly welcome the comprehensive nature of the agreement, the inclusion of the services sector and the tariff free access gained by red meat sector which is a huge win for producers and exporters.

“For the live trade, the Agreement will strengthen the already burgeoning trade in live dairy heifers which has grown by over 100% in 2014 (year on year) and the small, but potential rich live sheep trade,” Mr Crean said.

“Making us more competitive against the likes of other live dairy cattle export nations such as New Zealand will help stimulate further growth in the trade, not only for the benefit of livestock exporters but also Australian dairy cattle producers.

“Anecdotally, one in three Australian dairy farmers are now producing stock for the China market so today’s announcement is a further gain on improved access for the Australian dairy sector.

“In terms of the benefits for a feeder and slaughter cattle trade, we will have to wait for the health protocol to be concluded by the two Governments.

“We need to know the scale of the market access first before we can accurately speculate on the gains to be made.

“That said, there is no doubt that today’s agreement coupled with a new health protocol could well  provide unprecedented access for live cattle from across Australia to the Chinese market at a time of huge growth in red meat demand.

“While we see massive opportunities for the live trade into China, recent speculation has overstated the volume of exports in the short to medium term.

“There is much work yet to be done to commercialise the protocol arrangements including establishing compliant supply chains, arranging shipping capacity and finding cattle that meet the market specifications. Such arrangements will be limiting factors in the foreseeable future.”

 

Processor view:

Meanwhile red meat processors say the current tariffs imposed on Australian beef, sheepmeat and co-products exported to China represent an annual tax on the supply chain of around A$826 million..

“The gradual removal of this cost burden will positively impact the profitability of Australian cattle and sheep producers, processors and exporters,” the Australian Meat Industry Council said this afternoon.

“Volume safeguards will apply to beef but they have been set at levels that will allow responsible growth. The onus is now on the Australian industry to continue to demonstrate that it is willing to work with Chinese authorities and industry to build a transparent and dependable supply chain that meets the ever-increasing demands of the Chinese consumer.”

“As competition for market share in China is also likely to escalate over the next few years as other red meat suppliers potentially gain improved access to the market, few other initiatives pursued by the Australian government could do more to improve supply chain returns than an FTA with China,” AMIC said.

While the FTA with Korea has taken almost a year to ratify in Australia, and that has occurred with little opposition to the agreement, the ratification process for the FTA with China is likely to be more hotly-contested, especially on some of the labour issues. As a result it could be 2016 before it can be brought into force, processors suggested.

 

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