A leading agribusiness analyst has warned Australia’s agriculture sector is at risk from growing geopolitical tensions, arguing for a need to further diversify market opportunities globally.
RaboResearch Food and Agribusiness Australia and New Zealand general manager Stefan Vogel said Australia’s agricultural growth had occurred while largely remaining unnoticed in the grand geopolitical scheme, despite being slapped with tariffs from the US and China in the past 18 months.
He said beef exports — a vast majority of which are sold to the United States — were exposed to continuously growing tensions between the two global superpowers, highlighting trade bans and tariffs imposed previously from both countries.
“Despite the tariffs that we had last year have grown, we have seen that we’re pushing the largest volume of our beef into the US market — and 10 per cent tariffs have not hurt us,” he said.
“It’s great that we master flying under the radar, and that’s what we’re usually very good at in Australia — that we’re not at the core focus of the geopolitical headwinds — but we have a few big clients in the world market, and China is one of those.”
US President Donald Trump singled Australia out in April last year when rolling out his Liberation Day plan, slapping Australian beef with an exorbitant 10 per cent tariff.
That tariff was only slapped down by the US Supreme Court in May this year after about $166 billion was paid by importers as a result.
The US was Australia’s biggest buyer of beef, importing more than 412,000 tonnes of Australian beef out of the 1.4Mt shipped overseas.
But the growing tensions between China and the United States means Australia could be forced to choose between its main ally and biggest trading partner.
“We ship a lot of our products into the Chinese market, and we think the frictions between the US and Chinese over the next 10 years will grow further,” Mr Vogel said.
“We also need to be aware that flying under the radar is great as long as we can, but at some point in time we might be asked to choose.”
He said a reliance on exporting beef to the US could additionally be in strife, and disappear as a market, if “they get their act together” within the next few years despite little-to-no growth in its beef industry in the past 25 years.
A herd shortage and ongoing low numbers of cattle from forced destocking as a result of dry conditions in the US has contributed to a growth in beef export value and volume.
The US is Australia’s biggest boxed sheep and beef export market, representing nearly a third of the trade, with both markets worth more than $US1 billion — $1.6b — last year.
