An Economic Analysis of Reforms in the Australian Meat Industry Report

This report analyzes the economic reforms within the Australian meat industry, highlighting its position as a leading global beef exporter. It examines the challenges posed by global uncertainties, such as Brexit and new US policies, including potential trade barriers and increased competition. The analysis covers market dynamics, including the impact of China's demand, supply shortages, and the influence of government policies like the Trans-Pacific Partnership. The report also discusses the effect of competition and falling demand on livestock prices, and suggests policy recommendations such as subsidies, taxation adjustments, and price stabilization strategies to ensure market stability and support the industry's long-term growth. The report concludes by emphasizing the need for strategic reforms to address challenges and capitalize on opportunities.

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Reforms in Australian Meat Industry
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Australia’s beef and meat industry can be identified as one of the leading producers of
beef in the world. According to the reports published, in 2015-16, Australia was the largest beef
exporting nation of the world (Ams.usda.gov, 2017). In this particular study, the economic
reform in the Australian meat industry has been elaborated supportive for the growth of the
sector in the long-term. In order to identify the current status of the beef industry in Australia, a
recent article written by Locke (2017) has been taken into account describing the key
uncertainties to be faced by the beef industry of Australia in 2017.
Locke (2017) stated that latest global uncertainties such as the event of Brexit and new
policies of US President Donald Trump have created significant challenges for Australian meat
industry. The US President has vowed to partner Mexico with tariffs to develop larger beef
production in the United States. As a result of the scenario, the export of beef from Australia can
experience substantial headwinds. On the other hand, China’s surging demand for the live cattle
has been a positive sign for Australia’s meat industry. Meanwhile, the shipment of 1,200 Angus
cattle has verified that the demand for high-quality Australian beef has been kept intact in China.
In the current scenario, the Australian meat and beef industry is going through an
unprecedented era of indecision driven by new US policies and Britain exiting from the
European Union. Presently, the new US President has tried to negotiate with the Chinese
government so the US beef can be reopened for the Chinese market since the incident of mad
cow disease. According to Locke (2017), one of the first steps taken by Donald Trump after
getting elected as the US President was to withdrawn the name of his country from the Trans-
Pacific Partnership (TPP). After the exit of the United States from the TTP, it becomes an
independent beef producer. However, the Australian Government decided to remain with the
TTP and said that it will progress with other partners. Hence, the outcome of the economic

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reform led to a downfall in the Australia’s largest beef market by volume, i.e. the United States
by around 42 percent in the year 2016. Furthermore, recent growth in the market competitors has
also affected the meat and beef sellers engaging in the business since decades (Gillard and
Monypenny, 2016). It can be seen that the increase in the level of competition in the global
market has directly impacted the Australian Beef exports in the year 2016. A significant fall in
the Australian beef export can be evident that impacts the GDP contribution of the livestock
industry. A figure has been presented herein below for better understanding:
Figure: Australian Beef Exports
Source: (Abs.gov.au, 2017)

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Furthermore, one of the major factors determining the beef industry in Australia is tight
supply (Cox, Zhou and Choi, 2013). Due to the supply shortage, the sales of the beef have been
declined in the domestic market. In terms of beef production, reports published in 2015-16
confirmed that approximately 2.34 million tonnes cwt of beef and meat were produced in
Australia (Ams.usda.gov, 2017). On the basis of the figures, Australia was the seventh largest
beef producing countries in the world.
Figure: Top Ten World Beef Exporters (2016)
Source: (Ams.usda.gov, 2017)
In terms of beef exports, during 2015-16, Australia was identified as the largest beef
exporting country by producing 4% of the entire beef supply around the globe (Ams.usda.gov,

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2017). The total value of the beef and veal exported by Australia was worth $8.5 billion in 2015-
16 financial years (Abs.gov.au, 2017).
However, the Australian domestic market faces a significant shortage of beef due to the
high amount of export in the Asian markets. For instance, the new import policy of the
Indonesian Government in 2016 makes it important for the Australian exporters to transport one
female cattle out of every six cattle (Curtain, 2017). Furthermore, the extreme rain in the top end
has become a major challenge for the Australian exporters in order to locate available stock for
sale (Curtain, 2017). Therefore, a shortage of supply of livestock and beef can be highly evident
in the local market. It is important for the Australian government to take care of the beef
production need in the domestic market in order to maintain stability in the Australian beef
market. The falling demand for Australian Beef has directly impacted the price of livestock in
the global market. On the other hand, the shortage of stock in the domestic market has led to a
peak rise in the beef price. Hence, market instability can be seen in the recent time in the
Australian beef industry.
The Australian government need to take necessary measures in the form of fiscal policies
in order to safeguard the beef industry. For example, subsidies can be provided to increase the
production of the beef industry (Sun, Hyland and Bosch, 2014). Additionally, a wall must be
drawn over the quantity of export by using the taxation policy over the export quantity. For
example, Australian government can promote tax free export up to a particular quantity (Widiati,
2015). The export over the mentioned quantity can be liable for a higher amount of taxation.
Furthermore, the Australian government can introduce price flooring strategy and exclude the
middlemen from the supply chain system to maintain stable price in the market.

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Evidently, the above discussion has verified that recovery in the US beef industry and
new policy measures of the US President may create significant challenge for the mean industry
in Australia. On the other hand, the Trans-Pacific Partnership (TPP) and ASEAN partnerships
must be reviewed and restructured by the Meat and Livestock Australia to support the industry in
the long run. Furthermore, the event of Brexit may bring new beef exporting opportunities for
Australia as the political event will provide better access conditions in Britain. Conclusively,
price war, vicious market competition, and supply shortage issues can be controlled if the
Australian export and trade policies can be orderly placed.

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References
Abs.gov.au. (2017). Livestock and Meat, Australia, Jun 2017. [online] Available at:
http://www.abs.gov.au/ausstats/abs@.nsf/mf/7218.0.55.001 [Accessed Aug. 2017].
Ams.usda.gov. (2017). Beef | Agricultural Marketing Service. [online] Available at:
https://www.ams.usda.gov/grades-standards/beef [Accessed Aug. 2017].
Cox, R., Zhou, Z. and Choi, J. (2013). Beef supply chains in Australia. 3rd ed. Orange, NSW:
Asian Agribusiness Research Centre.
Curtain, C. (2017). Key challenges in store for live cattle export industry's 2017. [online] ABC
Rural. Available at: http://www.abc.net.au/news/rural/2017-01-25/live-cattle-export-outlook-
2017-heifer-demand-buffalo-indonesia/8207672 [Accessed Aug. 2017].
Gillard, P. and Monypenny, R. (2016). A decision support approach for the beef cattle industry
of tropical Australia. Agricultural Systems, 26(3), pp.179-190.
Locke, S. (2017). The key uncertainties for Australia's beef industry in 2017. [online] ABC
Rural. Available at: http://www.abc.net.au/news/rural/2017-02-06/live-cattle-ship-to-china-as-
beef-trade-navigates-uncertaintity/8243440 [Accessed Aug. 2017].
Sun, D., Hyland, P. and Bosch, O. (2014). A Systemic View of Innovation Adoption in the
Australian Beef Industry. Systems Research and Behavioral Science, 32(6), pp.646-657.
Widiati, R. (2015). Developing Beef Cattle Industry at Smallholders to Support Beef Self-
Sufficiency. Indonesian Bulletin of Animal and Veterinary Sciences, 24(4).