Australia-Coping with the economic downturn.

AUSTRALIA-THE FINANCIAL DOWNTURN AND THE MEAT TRADE.

THE global financial crisis (GFC) has played havoc with beef markets around the world through tighter credit availability, currency turmoil, and its effect on trade.

Speaker at the 2009 NSW Beef Spectacular, Dubbo, Meat and Livestock Australia’s Middle East and Africa trade services and global Halal program manager, Blair Brice, said consumer confidence had plunged significantly as the recession in the US, Japan and

Europe hammered demand.

It wasn’t all bad, though, as China, ASEAN (Associates of South East Asian Nations) and the Middle East beef markets were still registering growth, despite the slowdown, he said.

The trend as a result of the GFC had been less eating out with a fall in food service sales being particularly evident in the middle to upper-end restaurants.

The spin-off was the cheaper fast food sector had recorded an increase with hamburgers in the US and guydon and bento boxes in Japan absorbing some of the market lost by the middle sector of food services, while the retail sector also recorded increased demand as

more people ate at home, he said.

The main downside in the Australian market from the move to cheaper foods had been the shift from beef to poultry.

This trend towards poultry didn’t stem the shift away from the food service sector, either, with a 12 per cent fall for poultry and pork for the period from November 2007 to 2008.

Beef in the same period fell eight per cent, lamb six per cent.

Meanwhile, at the retail level, there had been a shift toward the cheaper cuts such as mince and sausages.

In the US, the per cent change in decreased food service sales from August 2006 to October 2008 almost mirrored the trend of increased grocery store sales from

June 2006 to November 2008.

For Australian beef producers, the saviour will most likely be the fall in the value of the dollar, which had a 40pc drop in value from July 2008 to March 2009 relative to the Yen, and a 35pc drop when compared to the US dollar.

This value difference in the Australian dollar has been far greater than the drop in global

incomes, so Mr Brice asked why there had been no flow through benefit to Australian beef producers.

It begins with the lack of credit, rapid currency changes, concerns about demand and huge stocks of US beef in Korea, he said.

"There are still shipments bought on a high dollar moving through the system," he said.

There had also been a five per cent drop in global incomes, which was pushing down global prices, and he was still trying to fathom how demand would fare, he said.

"Therefore the dollar is far more important to us than are actual prices," he said.

The result of all this was increased hand to mouth buying and an unprecedented level of

trade uncertainty.

"In the short term, we’ve still got some pain to go through," he said.