Summary
The value of Australia’s live cattle exports has increased strongly since the 1980s to $1.9 billion in 2019–20, comprising $1.6 billion for feeder/slaughter cattle and $0.3 billion for breeder cattle. Cattle exports are an important source of beef for processing and consumption in destination countries.
This report briefly examines key drivers of cattle export growth to Australia’s 2 main markets, Indonesia and Vietnam, that was made possible by first achieving biosecurity market access. The focus is on the longer-term trends to 2019–20. Since then, there have been shorter-term market disruptions associated with herd rebuilding, high cattle prices in Australia and reduced demand associated with the economic impact of COVID-19.
The report is a commodity-specific case study that follows an introductory ABARES report, released in July 2021, which developed a framework for analysing key drivers across a paddock-to-plate spectrum.
This case study aims to assist and inform government and industry in their efforts to identify and prioritise other markets to expand Australia’s exports. Australia currently has negotiated biosecurity protocols with most ASEAN countries, but further agreements would need to be in place to support cattle trade over time to the Philippines, Brunei, Myanmar and, via a third country, Laos. Importantly, this helps inform initiatives to expand trade opportunities and build the competitiveness, resilience and innovative capacity of the Australian agricultural sector.
Australia is one of the world’s top cattle and beef exporting countries. In 2019, it ranked second for bovine animal exports and first for bovine meat exports (Figure S1; official data excludes informal cattle trade which is discussed in FAO 2013).
This case study focuses on cattle produced for export to Indonesia and Vietnam, Australia’s two largest cattle export markets and both members of the Association of Southeast Asian Nations (ASEAN). Indonesia is a long-established importer of lighter-weight cattle from northern Australia that are moved to Indonesia’s feedlot industry before processing. Vietnam is a relatively new and quickly growing importer of higher-weight cattle that do not require fattening up prior to processing. Examining the drivers behind the import demand growth in both countries provides a good understanding of the drivers most important to this sector looking to expand its regional trade.
Figure S1 World's top 10 exporters of bovine animals and meat, by value, 2019
One of the key drivers of the Australian industry’s export success has been its capacity to recognise customer requirements and adapt its products to growing demand in member countries of ASEAN. This has been supported by fundamental structural, supply-side drivers, including northern Australia’s natural endowments, the industry’s productivity growth and Australia’s status as a country free from a range of cattle diseases.
Over the past decade, Australia has strengthened its international reputation as a supplier of high-quality cattle, where export supply chains are supported by strong biosecurity and animal welfare systems. The Australian Government’s Northern Australia Quarantine Strategy (NAQS) is particularly important for ensuring a high level of biosecurity protection for the cattle industry in northern Australia. The strong biosecurity system underpins confidence in destination markets about the biosecurity status of Australia’s cattle exports. In 2011 the Australian Government implemented the Exporter Supply Chain Assurance System (ESCAS) to achieve more stringent animal welfare standards for Australia’s feeder/slaughter cattle trade, including the import supply chains in destination countries. Importantly, ESCAS ensures high animal welfare standards are achieved for livestock handling in Australia’s export markets. The strong animal welfare system underpins broader community support in Australia and hence the long-term future of the cattle export industry, including possible export expansion to existing and new destination markets.
Markets such as Indonesia and Vietnam import cattle to enhance food security and consumer choice, allowing people to shift away from a high reliance on carbohydrates toward a more balanced diet that includes more animal protein. Since 2012 the value of cattle imports has increased strongly in both Indonesia and Vietnam (Figure S2). In 2019, live animals represented a large share of the integrated import supply chains that also include beef – 46% in Indonesia and 64% in Vietnam.
Figure S2 Value of cattle and beef imports to Indonesia and Vietnam, 2000 to 2019
The volume of beef consumption has increased strongly in Indonesia and Vietnam since 2000, both in aggregate and on a per person basis. Real income growth has been the main driver, accounting for over two-thirds of beef consumption growth in both countries between 2009 and 2019. Imports are an important source of supply in both countries. In 2019 the import share of beef consumption was 49% in Indonesia and 66% in Vietnam. The trade of cattle to Indonesia and Vietnam is part of a system of integrated import supply chains across the price-quality spectrum:
- live cattle, where the key advantage is flexibility; to maintain food safety without cold-chain storage, animals may be transported and processed closer to the final consumer markets
- frozen beef, where the key advantage is its storability, provided suitable cold-chain storage infrastructure is available, and
- fresh or chilled beef, which allows consumers to purchase higher-quality beef, although it has a shorter shelf-life than frozen beef.
There is scope for beef consumption growth to continue in Indonesia and Vietnam, as increasing incomes, urbanisation and changing dietary preferences have resulted in the emergence of modern food retail stores and supermarkets in cities—referred to as the ‘supermarket revolution’.
This case study examined key drivers of growth in Australia’s cattle exports after achieving biosecurity market access, with a focus on the 2 main ASEAN destination countries. Australia is a reliable supplier of high-quality cattle, consistent with achieving a high level of food safety for beef consumers in destination markets. Cattle are sold into value chains that support employment and enhance nutrition in these countries.
Increased availability of beef in ASEAN countries has the potential to enhance both food security and consumer choice in destination countries, allowing people to shift further away from a high reliance on carbohydrates toward a balanced diet that includes more animal-based products. Increasing consumer access to a range of meat types is also a potentially important risk management strategy, for example, by managing food supply risks that may be associated with serious disease outbreaks, such as African swine fever and avian flu.
Establishing new, well-integrated supply chains is a promising future direction to expand and diversify the cattle trading relationship between Australia and ASEAN countries. Integrated supply chains, supported by foreign direct investment and long-term contracts to reduce project risks in both the demand-side and supply-side of the market, would have the potential to more effectively link exports of lighter-weight cattle from northern Australia to new feedlot industries in ASEAN countries. Notably, demand is projected to strengthen over the medium term, as income per person in ASEAN countries returns to trend growth.
This case study aims to assist and inform government and industry in their efforts to identify and prioritise other markets to expand Australia’s exports. There are other countries with similar demand profiles and supply chain opportunities where there is export potential but maintaining strong biosecurity and animal welfare systems will be needed to unlock this potential.