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The unprecedented and unpredictable nature of COVID-19 makes it very difficult to report on the complete range of impacts to Australian red meat and livestock industry in an accurate and timely manner. In recent weeks there have been a number of localised spikes in infection in global markets where new cases had dropped to almost zero, including Australia, Korea and China, highlighting the risk of a second wave. As impacts are still felt globally and social distancing restrictions remain, this will continue to disrupt the consumption of Australian red meat, both domestically and internationally.

Here’s a summary of some consistent impacts seen in global markets:

Consumer demand

Concerns about financial security, the impact of COVID-19 on the economy and increasing pressure on household budgets have been and changes in purchasing behaviour for Australians.

More than two in five consumers globally are spending more time cooking and preparing food at home. While approaches to recipe and cuisine experimentation vary, familiarity remains key at this time.

MLA recently commissioned which confirms that consumers in a crisis gravitate to brands they trust. Australian beef and lamb have gained that trust over decades of combined industry efforts.

Foodservice sales

There has been a significant drop in sales at foodservice in most global markets, creating carcase imbalances. Typically, higher value loin cuts make their way into foodservice, balancing out the overall value of the carcase for Australian processors. With loin sales down, it will remain a constant challenge for the industry to move the entire carcase while .

Globally, operators in the foodservice sector that have been able to pivot to focus on takeaway or delivery models have been able to , as consumers continue to pursue convenience.

Retail sales

As foodservice channels slow, demand for meat through retail, particularly online, has lifted, as more consumers are forced to eat more meals at home. for the twelve weeks leading up to 19 April, with more than 130,000 new households purchasing beef. Although sales have slowed after the March peak due to ‘panic buying’, they remain above year-ago levels, with May sales 14.4% higher than the same month last year.

Demand has been strongest for staple items such as mince and sausages, which were key contributors to

A shift to ‘localism’ has also occurred as more Australians are buying food and drinks from local businesses out of convenience and to ‘support local’. This has contributed to domestic butcher sales .

There are some early signs that consumer behaviour may change across areas such as:

• Increased channel share for online grocery, as changed channel behaviour potentially sticks
• Increased focus on quality & safety, as consumers seek out trusted products
• Price sensitivity, as consumers have potentially restricted household and disposable income
• Preference for cooking at home, as social distancing measures continue

Adaption will be key to overcome implications created by these shifts.

Competitors

Global competitor supplies have slowed due to COVID-19, as outbreaks and distancing restrictions lead to a drop in processing speeds and, in some cases, temporary plant closures.

Inconsistent supply and shifting demand from international markets is likely to see the global competitive landscape remain unpredictable for months to come.

, with cattle slaughter now above year-ago levels. The unpredicted speed of this recovery will likely create implications for Australian and global markets as the US returns as a prominent competitor. There are still some challenges, however, with processors facing a large backlog of overfed cattle still on feed and on pasture.

Cattle slaughter in New Zealand has improved with North Island processing capacity back to normal and South Island slowly catching up. New Zealand has now ‘rid’ itself of COVID-19 and removed all lockdown measures except quarantine for international arrivals. The outlook for the rest of 2019-20 season is positive for NZ, with strong international demand for red meat led by China.

is bracing for a difficult period after a sharp rise in COVID-19 infections over May. While the impact of this has not yet mirrored that seen in the US, with the meat and poultry industry operating without significant disruptions, this could change rapidly if the virus spreads further. Given a weak domestic market and soft value of the Real, Brazil is depending on exports to sustain its meat industry.

Slaughter in Argentina lifted by 6% relative to 2019 for the calendar year-to-April, with beef exports up 20% over the same period in 2019. Argentina remains very competitive on the global market due to its weak currency.

Indian slaughterhouses have experienced heavy disruptions due to COVID-19, with livestock movements stopping since the lockdown commenced. India has leaned on exporting frozen buffalo meat primarily pulled from cold stores during this time.

Australian red meat exports

grew 7% in May relative to April, but were down 7% on year-ago levels. also declined, back 16% and 13% respectively in the calendar year to May on the back of tighter supply.

Growing export prices pushed the value of year-on-year in the first quarter of 2020. This has been driven by rising livestock prices triggered by recent rainfall that has increased restocker demand and tightened supply, as well as favourable exchange rate movements in the first few months of the year.

Some have improved, as offshore demand for lower value red meat products remains strong, however more premium offal products such as tongue and thickskirt have failed to find support. Hide prices remain flat as suppliers wait on end markets and tanneries to reopen.

Although from four Australian processing plants, it still remains a key market for Australian red meat. Due to Lunar New Year and COVID-19, , however they are up 54% in the four months to April on the same period in 2019. With a large and growing affluent customer base and significant protein deficit due to African Swine Fever, Australian beef is well-positioned to benefit given its brand recognition for reliability and safety. Lamb exports to China dropped 22% in May on year ago levels due to a lack of supply.

Beef exports to the US jumped in May, representing 21% of total Australian exports for the month as US customers sought to import more beef due to the decline in domestic production. However, beef exports for the calendar year to May were down 14%, which is mostly be attributed to slowing foodservice demand due to COVID-19. US export volumes are set to slow as beef production in the US ramps up on the back of their rapid recovery. Lamb exports to the US were back 33% in May due to reduced supply out of Australia.

Exports to Japan remained steady in May and are now up 1% on year-ago levels at 116,000 tonnes swt for the year-to-May as it remains Australia’s top beef destination for the year so far.

Several Middle East and North African (MENA) countries are experiencing economic uncertainty driven by COVID-19 and low oil prices. , particularly in foodservice channels, with retail only partly able to offset the lower demand. There have been that will provide opportunities for a greater degree of chilled primal sea-freight into some channels in the future. The speed at which air travel and air freight resumes in the second half of 2020 will be a key determinant in the success of carcase markets.

Korea has appeared as a potential . Already Australia’s fourth largest beef export market, Korea’s rapid and successful response to containing COVID-19 and rebuilding its economy has presented the opportunity to introduce high-value cuts to consumers.

for the calendar year-to-May, but the destination for these cuts has changed, with the US and Korea taking an increased share of the market as exports to Japan, Australia’s largest loin market, have dropped. A decline in grassfed loins by 8% and an increase in grainfed volumes by 12% have contributed to this market shift, as well as varied levels of foodservice and retail demand.

Goatmeat exports are down due to subdued demand from overseas markets such as the US. Trade disruptions and demand from foodservice channels have placed downward pressure on prices. For the calendar year-to-May, goatmeat exports are down 29% to 5,865 swt.

Eleven of Australia’s top fifteen most valuable red meat export markets are expected to enter recession in 2020, creating a range of .

Australian livestock exports

May live cattle exports were 109,000 head, bringing the calendar year-to-May figure to 475,000 head, just 3% back on the same period last year.

Australian’s largest cattle export market, Indonesia, has been hit by significant social as demand is impacted. For the calendar year-to-May, live exports to Indonesia were 191,000 head, back 22% on the same time last year.

Shipments to Australia’s second largest cattle export market, Vietnam for the calendar year-to-May were up 44% on year-ago levels, totalling 134,000 head. Vietnam’s outbreak of African Swine Fever has been impacting local meat supplies and is supporting demand for Australian cattle.

After a very slow January and February, Australian live sheep exports picked up substantially in March and remained strong in April. However, in the calendar year-to-May, exports are 22% back on 2019 numbers to 545,000 head.

For the calendar year-to-May, live sheep exports to Qatar were back 29%, Kuwait was back 17% and Jordan decreased 8%. Over the next few months shipments (apart from exempted shipment) will halt as summer prohibition begins.

Demand for live goats has been curtailed due to COVID-19 restrictions in Malaysia, which is Australia’s largest live goat export market.

Australian livestock markets

Online livestock sales have risen, saleyards have adjusted to video streaming sales and implemented strict entry protocols to conform with social distancing requirements.

in tighter supply numbers and continued restocker and processor competition. The Eastern Young Cattle Indicator (EYCI) at 772¢/kg cwt to now sit 207¢ above the five-year average. Widespread rainfall, which also supports heightened restocker demand, has also triggered a decline in .

MLA has recently released revised which are forecasting a further tightening of supply as improved conditions help initiate a national herd rebuild.

Sheep and lamb prices have also been supported by a winter contraction. Lamb production is forecast to fall according to the latest as restocker demand supports a recovery of the national flock.

³Ô¹ÏÍøÕ¾ly, for the calendar year-to-April compared to year-ago levels, at 410,000 head. Goat over-the-hooks indicators were also reported at their lowest level since April 2019, even though goat supplies remain well below year-ago levels.

From 3 June, MLA’s – including the cattle and sheep indicators – after being suspended since March due to COVID-19 disruptions to market reporting.

Impacts on MLA’s marketing activities

MLA staff remain in constant contact with trade partners to gauge market impacts and are looking to implement a number of surveys to gauge potential impacts of COVID-19 on consumer behaviours and attitudes, feeding adjustments to marketing activities.

MLA’s marketing programs are being adapted to a ‘lockdown and adaption’ phase that has seen a shift to meals consumed at home. MLA’s consumer marketing objectives in this phase aim to mitigate food safety risks through correct storage of beef and lamb products, ensure the availability of practical cooking information with a focus on high value cuts and emphasise the nutritional value of red meat as part of healthy meals.

Despite the global disruptions caused by COVID-19, MLA is via digital platforms – see how MLA’s Simply Spring campaign in the US has been . MLA is also exploring ways to deliver business development activities using digital formats such as webinars.

MLA is regarding the Australian Beef partnerships to align them with the new Games period. MLA intends to retain its Olympian and Paralympian Australian Beef Ambassadors and will continue to use these Ambassadors across 2020 and 2021 activities.

Impacts on MLA’s research, development and adoption activities

MLA has been able to as intended. However, in some instances MLA has been required to make some adjustments to project milestones and timelines. Travel restrictions have caused the most disruption where MLA and researchers have been prevented access to certain locations where projects are – and projects with international partners have been especially impacted.