Iron ore magnate Andrew Forrest eyes growing Chinese meat market
Bloomberg in Perth
Australian billionaire Andrew Forrest said he is planning to carry sample parcels of steak in his luggage on his next trip to the mainland.
After recently visiting mainland supermarkets and seeing limited Australian beef available, Forrest, who made his fortune exporting iron ore to China, returned home and developed a plan, including buying his own processing company, to boost shipments of the meat from Australia, the third-largest exporter.
"In China, I am being asked, 'Andrew where can I get high quality reliable beef'," Forrest said in the Perth office of his Fortescue Metals Group, Australia's third-biggest iron ore company. When he goes back next month, "I am going to take it in and give everyone a pack," he said.
Forrest, who this year bought Western Australia's only licensed beef exporter to China, said Australia could boost its production by 50 per cent should it secure a supply position in the mainland market. China, already the biggest consumer of meat, may double beef imports by 2018 as rising wealth changes diets, Rabobank International said in December.
"I see longer term, higher sustained prices," driven by steady demand from China, Forrest said on Wednesday, adding that he was considering buying more farms or companies to help boost output.
Early this month, Forrest bought Harvey Beef, which has the capacity to process 4,500 cattle a week at its plant 140km south of Western Australia's state capital, Perth.
Forrest said he met Premier Li Keqiang last month to discuss a bilateral agricultural partnership which would see Australia boost food supplies to China.
Australia, which sits behind India and Brazil in terms of beef exports and last year shipped 1.1 million tonnes, has an industry with a total value of A$12.3 billion (HK$88.4 billion), according to Meat and Livestock Australia. The mainland's imports of meat accounted for 9.2 per cent of meat consumption globally last year, up from 6.8 per cent in 2000, Commonwealth Bank of Australia said in January.
"The middle class is now the size of America and it is growing by 28 million people a year and if you think about how many extra mouths that means, it's quite mind-blowing," said Matthew Costello, an animal proteins analyst at Rabobank. "China has a declining local production and their herd is declining because of urbanisation."
Forrest's Harvey Beef purchase saw him join bigger iron ore rival Rio Tinto in holding agricultural assets. Rio owns six cattle stations in Western Australia's Pilbara region and with 24,000 head of cattle is the largest owner in the state.