That is the key finding from Rabobank’s Australian Red Meat Exports to China, which examined the impact of China’s growing animal protein demand Australia’s beef and sheepmeat exports to China.

China’s dominance in world meat trade is forecast to grow out to 2020, albeit at a slowing rate, and there are a number of opportunities for Aussie producers.

China is expected to import an additional 800,000 tonnes of beef and 50,000 tonnes of sheepmeat by 2020, Rabobank believes it will only lead to a moderate increase in Australia’s red meat exports to China.

While Australian beef and sheepmeat exports to China exploded in 2012 and 2013, Rabobank senior animal protein analyst Angus Gidley-Baird said since that time, Australia’s market share had been eroded by increasing competition.

Gidley-Baird said the Australian red meat industry needed to temper its expectations, and Australia was “no longer the only player in the Chinese market”.

“In the beef sector, competition into China has really stepped up with Brazil regaining access for frozen beef in mid-2015, while Uruguay and Argentina have also expanded their export programs,” he said. 

“And competition could increase further if the US gains direct access to the Chinese market, which is a distinct possibility.”

The world’s largest sheep population is in China; therefore most of Australia’s competition in the Chinese sheepmeat market comes from its own domestic production and also supply chains in New Zealand.

“With China exploring other markets and alternative supply sources, Australia needs to create a strong value proposition – rather than focus on chasing volumes – to differentiate the quality of its product and command a slightly higher price,” Gidley-Baird said.

“To give the Chinese consumer a reason to purchase Australian product at a slightly higher price than our competitors, we need to tangibly demonstrate food safety, quality, traceability, reliability and freshness.

“Caution must be exercised not to overprice the value of Australian beef and sheepmeat, but rather to price ourselves sensibly as per capita consumption remains relatively low.”

Gidley-Baird said Australia’s beef and sheepmeat industries needed to “play to their strengths.

Those strengths include quality, location, market access, trade relations and safety, while Australia is also set to increasingly benefit from the China-Australia Free Trade Agreement.

“China is one export market in which Australia can truly leverage the characteristics of its product and market access over others and, if we do this well, the Australian beef and sheepmeat sectors should avoid low-cost market competition and see exports to China grow at a sustained pace,” Gidley-Baird said.