THE United States is proving to be the land of opportunity for Australian beef producers, soaking up nearly 400,000 tonnes of Aussie beef in 2014 and showing no signs of coming off the pace in 2015.

Along with sheer tonnage, Australia is driving a thin wedge into the US grassfed beef market, a small but growing and important niche.

Advice on “healthy eating” that includes beef now seldom to fails to mention grassfed and/or organic in the same context. Australia is a prominent producer of both categories.

All the signs for continued demand from the US market are favourable, reports David Pietsch, Meat and Livestock Australia’s International Business manager. The biggest cloud in the picture is Australia’s ability to supply that demand as the flow of local slaughter cattle shrinks.

US cattle prices slipped slightly in late 2014, but they still remain well above the long-term average. US Department of Agriculture forecasts that 2015 prices will be around the same levels as at the end of 2014.

The price of Australian beef is trending up, too, in line with the increased cost of cattle following widespread rain.

In most markets, as the price of a commodity climbs, consumers tend to move away to buy something else. But this is America.

“There are reports – or at least talk – of more chicken and pork items on menus in the US, including in quick service restaurants and chains that traditionally have relied heavily on ground beef,” Mr Pietsch said.

“For poultry in particular, there is some inevitability that as it increases production it will grow usage due to price advantages. That said, growth in burger sales is still very strong as the US economy continues to recover, and that is a good sign of resilient beef demand.”

Within all this activity is the growing US demand for grassfed beef.

“We don’t want to oversell it,” Mr Pietsch said of the US grassfed market. “It remains only a niche imported segment within a massive domestic grainfed protein market, but I’m sure most Australian grassfed beef producers would be quietly pleased that their product is gaining more recognition for its positive attributes, rather than being seen purely as a commodity.”

MLA’s grassfed beef marketing efforts, in partnership with suppliers, have been “strongly directed” by the desire of AgForce Cattle and Cattle Council of Australia’s (CCA) marketing taskforce members to promote grassfed beef’s positive attributes in the US market.

The timing seems about right. Chilled grassfed beef exports to the US were up 89 per cent year-on-year in 2014, amounting to more than A$1 billion for the year.

A “significant amount” is finding its way onto retail shelves and in foodservice outlets supplying consumers focused on healthy and natural foods. Rapidly expanding burger chain Chipotle is buying an unknown quantity of Australian grassfed beef as part of its “responsible sourcing” program that focuses on grassfed and hormone free product.

Mr Pietsch thinks Australian grassfed beef sales in the US are falling into three main categories.

The long-standing market for frozen, lean, grassfed manufacturing beef still accounts for 65-70 per cent of Australian exports to the US, and has grown off the back of lower cow slaughter in the US.

In the next tier is beef for further processing or value-adding into manufactured meat products, meal solutions, jerky, or foodservice preparations like beef fajitas and deli meats.

The “much smaller but growing” niche is in retail, Mr Pietsch said. Retail is absorbing a range of products, like the one-pound ground beef ‘brick’ (mince), chilled ribeyes, tenderloins, striploins (sirloin), and top sirloin (rump). A growing number of restaurants are taking “considerable amounts of chilled beef”.

Future growth in these segments will somewhat be dictated by continued growth in US market demand, Mr Pietsch concluded, and by Australia’s capacity to supply.

MLA’s marketing is concentrating on developing brand loyalty to Aussie beef, in the hope that US consumers will continue to seek out the product in the face of potentially higher prices.

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