Food and Agribusiness Talking Points, 21-03-2016


China police continue crackdown on beef smuggling

US$32.6 million worth of beef produced has been smuggled into China in order to avoid customs duty and tax on this lucrative commodity. Apparently 6,000 tonnes of beef have come into China surpassing any controls over the quality of the meat and standards set by food standards agencies in China. The smuggling ring are believed to be organizing this crime in major cities such as Dalien, Beijing and Shanghai with 33 suspects currently being held over the suspected charges. In addition to US imports, the Brazilian government has also stressed how beef has been illegally smuggled into China which has in turn hurt both countries’ markets, damaging the local market and depressed beef prices. Fernando Sampaio ED of the Brazilian Beef exports association (ABIEC) mentioned “beef consumption is directly related to income. China’s has a rising incomes and large population” he further stressed that he would like Brazil to be a partner of its growth rather than hurting China’s economy. Click here to read the full article.

El Niño threatens Australian Agribusiness

Delegates at the Global Trade Review’s Australia Trade and Supply Chain Finance Conference in Sydney last week unanimously agreed that the effects of the 2015 El Niño will be the biggest challenge facing the agribusiness sector this year. In 2015 El Niño was the strongest on record since 1997, and when the 1982 phenomenon is added into the mix, they equate to the three worst instances in the past 50 years. With extended droughts and heatwaves, wheat harvest was cut by 5.1%. However, Australian authorities have predicted a positive forecast for the upcoming year, maintaining that the Australian agricultural production is lined up to top AUD$60 billion. Click here to read the full article.

Calls for innovation in Agriculture 

The Director of the International Food Policy Research Institute has called for farmer’s subsidies to be provided for agriculture related technology upgrades rather than for grains. Fan Shenggen, in an interview with China Daily, suggested that agricultural production, specifically of corn, wheat, rice and soybeans has been far above demand in recent years and that policies need to be introduced to increase efficiency in areas with less supply such as in meat and milk products. He articulated that the opportunity to invest in technology in order to improve productivity is ripe and if acted upon will have long term, positive impacts on the industry’s future development. Investment in agriculture currently takes up about 3% of China’s annual GDP, with a comparatively high proportion being used for subsidies. Click here to read the full article.

China shifting miners into farming  

In anticipation of the millions of layoffs decided in the recent annual session of parliament, Chinese authorities are shifting redundant workers from the state-owned steel and coal companies to jobs in farming, forestry and public service. In an effort to restructure the economy and strip excess industrial capacity, the government has agreed on a 100 billion RMB deal for relocating state workers over two years. Although this would prevent a corresponding spike in unemployment, jobs in the farming sector traditionally pay less with the average annual mining wage in 2014 sitting at 61,677RMB compared to 28,356RMB in the farming industry. Lu Hao, governor of Heilongjiang has commented that workers are willing and eager to learn new skills however some are simply not able to adapt. Click here to read the full article.