Agriculture - JBS Australia Pty Limited

As the largest meat processing and value adding business in the country, with a business that covers beef, lamb, pork, small goods and prepared meals, JBS Australia (JBS) sees the completion of the ChAFTA will open up greater opportunities, especially for Australian beef and lamb, and through reduced tariffs.

JBS operates a range of beef, multi species (beef and lamb) and pork processing facilities across five Australian states (Queensland, New South Wales, Victoria, Tasmania and South Australia). It employs 12,000 people and sells high-quality beef and lamb products to over 50 international markets.

Across the JBS portfolio of grass-fed beef, grain-fed beef and lamb, it has established strong brands such as Great Southern, Riverina, Beef City Black and AMH, which are renowned for consistency and quality.

With growing per capita incomes, China over the past three years has been a growth destination for both JBS and Australian beef and lamb. The growth of the middle class and the demand for quality animal protein and food solutions in China are significant. The reduction in tariffs to zero over time for beef, lamb and pork is a great outcome. 

Beef

Tariffs will be eliminated on beef (currently ranging from 12 to 25 per cent) over nine years. In addition, there will be the elimination of a 12 per cent tariff on offal within four to seven years.

China has retained the right to apply discretionary volumetric-based safeguards on beef. The annual 'safeguard' trigger is 170,000 tonnes, which is 10 per cent above the historical high of 2013. Importantly, the volume will grow over time and there is also a set review process to look at removal of the safeguard.

"JBS is a one-stop-shop business in terms of its capacity to supply a range of beef and lamb, chilled and frozen, grass and grain-fed beef. Importantly, we have established a range of key customers in China with the infrastructure and capacity to grow opportunities for our brands in this market", Brent Eastwood said.

Lamb

Tariffs on lamb and sheep meat (12 to 23 per cent) will be eliminated over eight years. Though China is a major producer and consumer of pork, opportunities may be there for our Primo business, with tariffs of up to 20 per cent being eliminated within four years.

JBS has a majority of its processing facilities approved to export to China. We see with the advent of ChAFTA that this will assist the listing of the two remaining JBS plants in Rockhampton and Cobram.

Australia's largest beef processing facility, JBS Dinmore, located near Ipswich in Queensland, is one of ten export beef facilities accredited to export to China. This provides opportunities for JBS and its livestock suppliers into the higher-value chilled beef sector in China, servicing key restaurant and food service customers. 

"Expansion of chilled approvals to include our premium JBS Riverina grain-fed beef and Brooklyn grass-fed facilities will provide Chinese customers with greater 
high-end product opportunities", Brent Eastwood said.

Non-tariff barriers remain

Though there is tremendous potential in China, it is still a challenging environment to do business. Compared to other major export destinations, it has a range of 
non- tariff barriers. Tariff barriers, along with quarantine, packaging, labelling and licensing regulations impose both major costs and risks in servicing China.

"In a highly competitive international market for beef and lamb, where demand outstrips supply, lower tariff rates alone will not guarantee volume, rather it is the capacity to pay the price that will determine the volume of Australian product exported to China", Mr Eastwood said.

The key from JBS' perspective as the major exporter in the Australian red meat sector is for the urgent ratification of ChAFTA for it to enter into force.

"Tariff reductions for beef and lamb will position Australia well against the New Zealanders, a major competitor, who will have zero tariffs on their product into China in 2016," Mr Eastwood said.

Prompt ratification will improve Australia's competitive position and provide Australia a formal platform to address non-tariff barriers," Brent Eastwood said.

The onus will be on the Federal Department of Agriculture, Fisheries and Forestry in conjunction with the Department of Foreign Affairs and Trade to be proactive in urgently addressing such barriers to efficient trade in beef, lamb, pork and manufactured food from Australia to China, through transparent market access based on internationally accepted food safety and scientific protocols.