Assessment Task 1: Industry Sector Analysis
This report is related to analysis of meat sector of the Australian food industry. It will identify and evaluate the competitive challenges and opportunities facing this sector.
Australia is small producer of beef, but it is at second position in export of beef behind Brazil. It consists of 150,000 people from cattle properties, feedlots, processors and supporting industries, who are involved in the production of nutritious food. It dominates in terms of quality, safety and nutrition of meat that outranks its competitors (sustainableaustralianbeef.com, 2017). However, this sector is growing at great pace but the meat producers think that there will be significant opportunities and issues for the sector.
The followings are the opportunities and challenges that the Australian meat sector faces:
The Australian industry has strength of disease fee, clean and green image that provides it opportunities to access the number of markets. It is because the public concerns to high quality and sustainability production of meat across the globe. Meat products of Australia are free from infectious animal diseases like foot-and-mouth disease (FMD), or the bovine spongiform encephalopathy (BSE) that provide trade advantages to this sector.
In political concern, there is stability and certainty in the political environment of Australia that leads to better trade policies and laws for the betterment of the beef sector. The corruptive index is low as Australia is at 13th in the rankings showing the least corrupt country (ABC News, 2017). Apart from this, this industry also gets support by the government for bi-lateral investment leading to export growth (Government of Western Australia, 2017). All these political aspects provide better opportunities to the sector to grow in the domestic and international market.
At the same time, Australia is the second largest exporter of beef that creates opportunities for the meat sector to grow internationally. Moreover, there is an increasing international demand for protein to be healthy as the global consumption of meat has tripled over the last four decades and increased 20% in just the last 10 years (Worldwatch Institute, 2017). In Australia, there is availability of advanced technologies including meat processing facilities to enhance the production efficiency that create high opportunities to meet the international demand. In addition, the Australian meat processors also use genetics in processing that helps to increase the production efficiency. Similarly, there is also opportunity in terms of increasing demand of meat from the Asian countries that cause various opportunities for the Australian meat sector. The rising consumer awareness of beef and growing markets in emerging Asia are also causing better opportunities for the Australian meat providers (Hocquette, et al., 2012). It is because Australia has proximity advantages to the Asian countries, so it helps to increase the export opportunities. In addition, the rising incomes and population growth of Australia may also increase demand for meat in the domestic market that may cause business opportunities for the sector.
Besides opportunities, some global uncertainties with issues such as Brexit, tariffs by USA on Mexico may impact on the export growth of the Australian meat sector (Locke, 2017). It is because uncertainty in the global market may affect the demand of meat and its export value that can have a significant impact on the meat sector of Australia. It is also a big challenge for the Australian meat sector to handle increasing concerns of quality and sustainability in public. Large-scale meat production causes serious harms to the world’s climate (Thomas, Scollan, & Moran, 2011). The inconsistent climate and poor soils of Australia cause periodic overgrazing and loss of pasture ground cover that leads to soil erosion. So, it is essential for the meat producers to adopt the Australian Beef Sustainability Framework regulated by The Red Meat Advisory Council (RMAC) (sustainableaustralianbeef.com, 2017).
There are some challenges related to entrance of Indian buffalo meat producers in specific markets and presence of fierce competition from Brazil’s higher exports and US online supplies (Locke, 2017). It will be crucial for the Australian meat sector to enhance its presence in other markets and use online sources to access different markets. Apart from this, it may be a big challenge for the Australian meat sector to handle the increasing concern of the countries towards global beef production and reduce export demand. It may affect the export growth of the Australian meat sector as other countries are likely to be independent in meat production. Additionally, this sector is dependent on small number of export markets, so it is challenging for the Australian meat sector to compete with other markets. The Australian meat market is at risk from food borne pathogens that can cause a big reputational and financial loss for the sector (Bell, et al., 2011). It is important for the meat producers to ensure the quality and safety at each level of supply chain. In addition, static or shrinking resources are also a big issue for the Australian meat sector as there is limited availability of the land which could be inappropriate for beef production in Australia (Burrow, 2010).
Based on the above analysis, it can be summarized that the Australian meat sector of food industry is facing both opportunities and challenges in the global market. There are several opportunities like supportive government policies, increasing demand of protein, sustainability aspects of the Australian meat sector, disease free image, increasing meat demand from Asian countries and advanced meat processing facilities that can be beneficial for the sector to grow consistently. But at the same time, the sector may face some challenges including increasing concerns of quality and sustainability in public, threats from new entrants, competitive rivalry from Brazil’s higher exports and US online supplies and increasing concern of the countries towards global beef production, dependence on small number of export markets and shrinking resources.
ABC News (2017). Australia fails to improve ranking in global corruption index amid mounting push for federal watchdog. Retrieved from: http://www.abc.net.au/news/2017-01-25/australia-fails-to-improve-ranking-in-global-corruption-index/8212226
Bell, A. W., Charmley, E., Hunter, R. A., & Archer, J. A. (2011). The Australasian beef industries—Challenges and opportunities in the 21st century. animal frontiers, 1(2), 10-19.
Burrow, H. M. (2010). Achieving adoption and innovation in Australia’s beef industry. Animal Production Science, 50(6), 418-423.
Government of Western Australia, (2017). The Western Australian beef industry. Retrieved from: https://www.agric.wa.gov.au/industry-development/western-australian-beef-industry
Hocquette, J. F., Botreau, R., Picard, B., Jacquet, A., Pethick, D. W., & Scollan, N. D. (2012). Opportunities for predicting and manipulating beef quality. Meat science, 92(3), 197-209.
Locke, S. (2017). Donald Trump and China: The key uncertainties for Australia’s beef industry in 2017. Retrieved from: http://www.abc.net.au/news/rural/2017-02-06/live-cattle-ship-to-china-as-beef-trade-navigates-uncertaintity/8243440
sustainableaustralianbeef.com, (2017). About the beef industry. Retrieved from: http://www.sustainableaustralianbeef.com.au/governance-principles
Thomas, C., Scollan, N., & Moran, D. (2011). A road map for the beef industry to meet the challenge of climate change—A discussion document. Animal Frontiers, 1(2), 6-9.
Worldwatch Institute, (2017). Global Meat Production and Consumption Continue to Rise. Retrieved from: http://www.worldwatch.org/global-meat-production-and-consumption-continue-rise-1