Billion dollar meat deal with Chinese importer
A surge in demand for livestock is expected after Western Australia's largest meat processor signed a $1 billion deal with Chinese company Grand Farm
Grand Farm is China's largest red meat importer, but still only supplies one per cent of the Chinese market and aims to increase that level to three per cent.
Under the joint venture, Bunbury-based family abattoir V&V Walsh will process an extra 500,000 lambs and 30,000 cattle a year to begin with.
V&V Walsh will also assist in setting up a major undercover cattle feedlot in Inner Mongolia.
Co-owner Peter Walsh says the deal marks the start of the much anticipated dining boom.
"It's huge for agriculture," Mr Walsh said.
"I mean everybody has been talking China for quite a few years now but I think it's all starting to happen now.
"The figures are mind-boggling and they are real figures and I think it's about time the farmers got what they deserve."
State Agriculture Minister Ken Baston says the deal will restore confidence in the West Australian farm sector.
"If average lamb consumption in China rises by one kilogram per person, an extra 65 million lambs will be required.
"For every one kilogram of extra beef consumed in China, an extra 6.5 million cattle will be required.
"I think it's an exciting phase that agriculture's entering into in WA.
"It's something that will give it a boost, this means jobs, employment, confidence in people investing in buying farms."
Rob Gillam is a sheep and cattle producer near Dongara, 400 kilometres north of Perth.
He says this deal could see more producers shifting from grain back to livestock.
"We have seen a movement over the last 20 years of people who've gone more and more heavily into cropping.
"This may give some of those people, particularly those cropping land which is near the break even point at times, the opportunity to move back into livestock again but it'll all depend on prices of course.
"This is another plank in the extraordinary growth that we're now seeing in demand for red meat protein around the world."
Geoff Pearson owns and manages a cattle feedlot in Myalup, 30 kilometres north of Bunbury.
While he recognises it's a fantastic opportunity for WA producers, he questions whether the state has the available stock.
"If the supply that they're talking about is to be adhered to I don't think we'll have the numbers here at this stage."
Rob McConnel is the leader of agribusiness for Deloitte Australia and he sees the deal being of great significance.
"It's very important in that it makes a statement in terms of intent and capital and trade flows.
"The proof will be in the pudding of what eventuates, but if everyone goes in with eyes wide open as I'm sure the Walsh's have in terms of establishing a joint venture going forward, it should work."
There is the question of the effect on the price farmers get for their product given such a massive deal could effectively make Grand Farm the 'price maker' and Australian farmers and processors the 'price takers'.
"Having been to China and seen the Australian product, I've seen the premium Australian meat fetches over there in supermarkets and retail outlets.
"The question always for the supply chain is does enough of that price premium go back to those who've made the capital investment ie the farmers, and the processors as well, in terms of who's got the biggest fixed assets."
Grand Farm is China's largest red meat importer, but still only supplies one per cent of the Chinese market and aims to increase that level to three per cent.
Under the joint venture, Bunbury-based family abattoir V&V Walsh will process an extra 500,000 lambs and 30,000 cattle a year to begin with.
V&V Walsh will also assist in setting up a major undercover cattle feedlot in Inner Mongolia.
Co-owner Peter Walsh says the deal marks the start of the much anticipated dining boom.
"It's huge for agriculture," Mr Walsh said.
"I mean everybody has been talking China for quite a few years now but I think it's all starting to happen now.
"The figures are mind-boggling and they are real figures and I think it's about time the farmers got what they deserve."
State Agriculture Minister Ken Baston says the deal will restore confidence in the West Australian farm sector.
"If average lamb consumption in China rises by one kilogram per person, an extra 65 million lambs will be required.
"For every one kilogram of extra beef consumed in China, an extra 6.5 million cattle will be required.
"I think it's an exciting phase that agriculture's entering into in WA.
"It's something that will give it a boost, this means jobs, employment, confidence in people investing in buying farms."
Rob Gillam is a sheep and cattle producer near Dongara, 400 kilometres north of Perth.
He says this deal could see more producers shifting from grain back to livestock.
"We have seen a movement over the last 20 years of people who've gone more and more heavily into cropping.
"This may give some of those people, particularly those cropping land which is near the break even point at times, the opportunity to move back into livestock again but it'll all depend on prices of course.
"This is another plank in the extraordinary growth that we're now seeing in demand for red meat protein around the world."
Geoff Pearson owns and manages a cattle feedlot in Myalup, 30 kilometres north of Bunbury.
While he recognises it's a fantastic opportunity for WA producers, he questions whether the state has the available stock.
"If the supply that they're talking about is to be adhered to I don't think we'll have the numbers here at this stage."
Rob McConnel is the leader of agribusiness for Deloitte Australia and he sees the deal being of great significance.
"It's very important in that it makes a statement in terms of intent and capital and trade flows.
"The proof will be in the pudding of what eventuates, but if everyone goes in with eyes wide open as I'm sure the Walsh's have in terms of establishing a joint venture going forward, it should work."
There is the question of the effect on the price farmers get for their product given such a massive deal could effectively make Grand Farm the 'price maker' and Australian farmers and processors the 'price takers'.
"Having been to China and seen the Australian product, I've seen the premium Australian meat fetches over there in supermarkets and retail outlets.
"The question always for the supply chain is does enough of that price premium go back to those who've made the capital investment ie the farmers, and the processors as well, in terms of who's got the biggest fixed assets."
Comments
Post a Comment