Exports to China on hold
High cattle prices, quarantine problems limit Ruralco opportunities
AGRIBUSINESS Ruralco says quarantine issues and the high prices of Australian cattle are holding back the live export trade to China.
“The obvious medium to long-term opportunity is cattle into China,” Ruralco chief executive Travis Dillon said as the company reported its half year financial results.
“That’s a slow burn partly because of quarantine issues that are still to be resolved, but also partly because the cost of Australian cattle is still high.”
Mr Dillon said quarantine issues centred on the potentially deadly bluetongue disease found in Northern Australia and the resistance of Chinese authorities to allow Australian cattle into bluetongue-free zones in China.
“But the real issue in terms of momentum is around the cattle price,” Mr Dillon said. “Our cattle are still too expensive going into China.”
South America is exporting a lot of less expensive cattle to China and boxed frozen beef is also providing competition for live exports, he said.
Australian cattle prices may have to come down by around 20 per cent to boost live export markets, Mr Dillon said.
Ruralco’s profit in the six months to March rose 15 per cent to a record $12.4 million, as favourable conditions in summer boosted cropping and weed-spraying activity, lifting sales of rural supplies such as agricultural chemicals and fertiliser. Strong livestock prices also boosted agency sales.
Mr Dillon said Ruralco’s live cattle export business performed well in the first half of its fiscal year and the company planned to pursue conservative growth in the business.