1. Outlook for the Australian beef industry Phillip Island August 2009 JOHN WYLD, Board Member Meat & Livestock Australia

2. Box Plains – Tarwin Lower

3. Young Koolomurt Bulls

4. Address outline The short term challenge – the global economic crisis Medium to longer term market prospects Longer term industry issues / challenges

5. Tighter Credit Availability Currency Turmoil Economic Recession – Trade Disruption – Demand Downturn CREDIT CRISIS

6. Impact of the GCC on the beef trade De-pipelining in all markets – minimise stocks to minimise credit & exposure Shaken up the trade as line of credit tougher, & importers caught with dear product – some importers will not survive Russia buying ceased for a while Korean buying low – not helped by stocks of cheap US beef

7. Consumer sentiment plunges globally 200420052006200720082009 80 90 100 110 120 130 140 Roy Morgan Consumer Confidence Rating 979901030507 09 0 50 100 150 Conference Board Consumer Confidence Index United StatesAustralia

8. Impacts of the GCC on the meat consumer Overall fall in expenditure on food and meat Shift from dearer foods to cheaper foods – eg. from beef to poultry Less eating out & more at home – Fall in food service sales – Rise in retail sales Shift from dearer foodservice to cheaper food service – From middle to upper level restaurants – To fast food At retail, shift from steaks to sausages & mince  Importantly – it is happening everywhere at the same time!

9. Lack of credit De-stocking US return drought dairy cow kills US demand  8% Strong Middle East & Asia demand low global supply 2009 cattle price ▼2% 2009 lamb price ▲21% GFC positive for lamb, but not beef. Why? Its a matter of supply and demand balance

10. Medium to longer term prospects

11. Remember the global food price inflation crisis of 2007/08? Venezuela Argentine Africa Indonesia Mexico

12. Remember the global food price inflation crisis of 2007/08? Venezuela Argentine Africa Indonesia Mexico The current global turmoil only gives the world a short respite from these pressures Driven by the industrialisation of the population hubs of China & India shortage of agricultural land & need for more land for grain production – for ethanol & food

13. Meat consumption is driven by two basic factors - income 198020002016 0 20 40 60 80 US$ (trillions) Growth in world GDP Current crisis

14. Projected beef import growth 2008 to 2018: FAPRI

16. Longer Term Challenges: Competition Nutritional Issues Animal Welfare Market Access Environment – Climate Change

17. Competitive challenges

18. Brazil & other beef exporters will compete fiercely with Australia to exploit available opportunities

19. Nutritional issues

20. Vegetarianism on the rise?

22. Animal welfare

23. Animal activists/welfare Increased pressure from animal activist/welfare groups: – sophisticated and well funded campaigns  Online  Community networks/events/youth groups – Influencing community support and perceptions of the trade – Petitons/letter writing campaigns to Government

24. Market access

25. Every Market we service has barriers E.g.Japan38.5% import duty EU7,500 tonne quota plus 20% duty 80% over quota

26. WTO Doha Round - On ‘life-support’ - cautious optimism to outright pessimism - No appetite by some of the 153 members for trade reform - The likely outcome….. Lower ambition than sought

27. Free trade agreements The World does have an appetite for FTAs (400+)

28. Environment

29. Australian greenhouse gas emissions Agriculture’s contribution to national emissions

30. Cattle are far more polluting under Kyoto protocol methodologies than other types of livestock

31. Impact of CPRS on the beef industry with agriculture included BeefPorkPoultry 0 -5 -10 -15 -20 -25 -30 -35 % change in gross value of production 2020 2030 GrassGrain 0 -5 -10 -15 -20 -25 -30 -35 % change in gross value of production 2020 2030

33. Beef industry attracting unfavourable publicity generally over the environment

36. Favourable future, Australian industry well positioned Beef consumption & trade expected to grow Australia is one of the world’s most efficient suppliers of grassfed & grain-finished beef Good product quality & rising – Meat Standards Australia/Eating Quality Assured Top disease freedom Safe meat & product integrity – LPA, supply chain QA, NLIS We ignore the challenges we face at our peril But MLA & Industry well aware and working hard

37. Thank you