Philippines remains prominent export destination for Australian red meat

MANILA, Philippines -Australia, the largest exporter of red meat to the Philippines, expects the Philippines to remain a prominent export destination in Southeast Asia despite an expected slowdown in worldwide exports of Australian red meat this year as farmers rebuild their herd.

In a briefing Thursday, Meat and Livestock Australia (MLA) — an organization that provides marketing and research and development services for Australia’s cattle, sheep and goat producers — said the thriving food service scene in the Philippines, as well as the shift to a more protein-based diet rather than a starch-based diet as purchasing power rises, is expected to keep demand high.

Other factors contributing to sustained high demand for Australian red meat in the Philippines is the enforcement of the Asean-Australia-New Zealand Free Trade Agreement (AANZFTA) in 2015 that lowers to zero tariffs on beef and lamb exports.

Fast urbanization and expansion of the financially-empowered middle class is also fueling consumption of protein.

MLA country manager Peter Paul Perez said more local restaurants are now offering a wide range of meat option, taking advantage of Australia’s capacity to supply red meat at every type of requirement from restaurant grade cuts to the requirements of manufacturing companies for hamburger patties and corned beef.

Perez said that while Filipinos still place great consideration on price, consumers are also placing emphasis on the quality of meat. He noted that Australian beef is well known from its traceability traits. The industry has also remained free from animal diseases.

He noted that importers of Australian red meat have strengthened their presence outside of Luzon.

“Where there only used to be five active Australian red meat importers, there are now over 25. They are present not just in Metro Manila, but also in VisMin too, and some maintain offices in resort towns like Boracay to service the restaurant market there,” said Perez.

Data from the Bureau of Animal Industry shows that as of 2013, Australia has cornered 47 percent of the Philippine market for red meat. It’s main competitors are New Zealand, which has a market share of 21 percent; United States, 16 percent; Brazil 13.9 percent. The balance of the supply is provided by minor players like Canada and Japan.

The Australian red meat industry is valued at A$17 billion. Australia hold four percent of the world’s cattle inventory, the source of four percent of the world’s beef supply.

It’s largest export markets are Southeast Asia, China, Japan, US and Korea.

In 2014, Australia exported to the Philippines 34,353 tons of beef (up 27 percent year-on-year); 566 tons of lamb meat (up 18 percent year-on-year); and 62 tons of mutton (up 73 percent year-on-year).

Other than red meat, Australia also exports live cattle for breeding. In 2014, 35,000 heads came to the Philippines last year, an 80 percent volume growth from the previous year. Live cattle imports from Australia are usually brought to farms in Pampanga.

Beginning this year, Perez noted that Australian beef exports are expected to slow down by 15 percent — a supply correction — as the industry emerges from a five-year drought that forced animal raisers to immediately slaughter their cattle, therefore resulting to very high beef production levels in the past two years.

“So in 2015, this is expected to correct to a more acceptable level,” he said.

“As most farmers are still rebuilding their herds. The domestic and export markers will be competing aggressively and will see a test for price sensitive markets like the Philippines,” he added.

Perez noted, however, that demand in Southeast Asia and China is expected to be strong because of increased purchasing power and a wide range of meat products.

“Even if the volume of exports will be slower, the Philippines is expected to steal a corner or that volume because we now have stronger buying power,” he said.