Australian beef will compete with American exports as the Chinese market opens up to the US, for the first time in 13 years.
The deal is expected to be finalised in mid July.
Rabobank said Australia had an advantage because it had already been providing beef free of hormone growth promotants (HGP) and with full traceability of the life of the cattle.
At the moment, American hormone free, organic beef sells for a premium on the domestic market.
“The Chinese consumer has to pay at least that premium to attract it away from that current market,” said Rabobank’s senior protein analyst Angus Gidley-Baird.
Australia recently signed a unique deal with China for greater access for chilled beef, favoured for the premium end of the market.
But Australian exporters will still have to compete with similar products out of the US, at some point.
Mr Gidley-Bird said since the height of 2015 when $1 billion worth of Australian beef was sent to China, the market was worth $670 million in 2016, and it was facing increasing cheaper competition from South America.
“US product is probably a lot more consistent with Australian premium higher quality beef, more so than Brazilian and South American beef.”
Rabobank said the US was growing its exports, 2 per cent higher than last year, as a result of the bigger since the drought.
US anxious to get back in China
The US Meat Exporters Federation said processors could start exporting beef to China as soon as the details and restrictions were worked through in July.
“It has the potential to be very significant, with China the fastest growing beef market in the world,” said Joe Schuele, director of communications with the Meat Exporters
“We’ve been on the sidelines as other beef supplying countries have grown their exports there, so we’re anxious to get back in.
However, he said, it would depend on what the export requirements were.
“Until then we won’t know what percentage of our beef will be eligible,” Mr Schuele said.
“China really became a big global beef importer, last year taking $US2.6 billion worth, from Australia, Brazil, Uruguay Argentina.
“That’s about 10 times the value they had imported 10 years previously.
He said this showed how much the demand for beef had grown and why the company was anxious to get back into that market.
Cattle ranchers anxious to resume exports
Overjoyed cattle ranchers said it could not be underestimated how much this would mean to the US beef industry.
Only 15 per cent of US beef is exported, but with the increased herd size, they need to find more markets.
“We are extremely happy with agreement reached by the White House, to restore beef access to China. I think you have to look at the potential,” said Craig Uden, a cattle feeder and cow, calf raiser in Nebraska, and President of the National Cattlemen’s beef association.
“Right now we currently enjoy $325 a head for export cattle, and to keep our strong and vibrant beef industry, we have to continue to work on more exporting.”
But this comes as US President Donald Trump continues the rhetoric about a wall on the Mexican border, and redrawing the North American Free Trade Agreement.
“A you all know, the National Cattlemen’s Beef Association was very much in favour of the Trans Pacific Partnership and without that now, we’re going to work with this administration to work on bilateral agreements and today we are in Mexico and we’ll also be visiting Canada.
“As we talk about the NAFTA agreement, we want to work to maintain that agreement with Canada and Mexico.”
By Sarina Locke