Live exports from Australia to Vietnam skyrocket, but supply chain doubts remain

Compliance with Australia’s Exporter Supply Chain Assurance System remains a sticking point
Compliance with Australia’s Exporter Supply Chain Assurance System remains a sticking point

Related tags Live cattle exports Supply chain International trade Livestock Australian livestock exporters Beef

A boom in Australian live cattle exports to Vietnam looks set to continue this year, thanks to favourable currency conditions, the depletion of the Vietnamese herd by exports to neighbouring China, and increasing demand for fresh quality beef from Vietnamese consumers.

Australian Livestock Exporters’ Council CEO Alison Penfold told GlobalMeatNews​ that significant investment was being directed into building and upgrading slaughtering facilities and feedlots in Vietnam to accommodate the increasing imports. Moreover, Australian exporters were looking to build trade with Vietnam into a long-term, sustainable market.

Live cattle exports from Australia to Vietnam increased 171% year-on-year from 2013 to 2014, according to figures released by Meat and Livestock Australia, jettisoning Vietnam into second place behind Indonesia as Australia’s second-largest live cattle export destination. Vietnam imported 181,542 head of cattle from Australia in 2014 or 14% of Australia’s total live cattle exports, up from 66,953 head the previous year.

Compliance with Australia’s rigid Exporter Supply Chain Assurance System (ESCAS), however, remains a sticking point. ESCAS was introduced in 2011 in response to public concern over the welfare and slaughter conditions that Australian animals encounter when exported to other countries. It obliges Australian exporters to track animals throughout the supply chain to the point of slaughter, in accordance with World Organisation for Animal Health (OIE) animal welfare standards.

There have been recent well-publicised instances of leaks from the Vietnamese supply chain, where animals have gone missing from ESCAS-compliant facilities to be allegedly slaughtered elsewhere in sub-standard conditions. "The community expects the system to be perfect from day one. We acknowledge that it is not perfect… and auditing for compliance [with ESCAS] is just one aspect of making sure trade is sustainable. It’s critical that we continue to work on the ground with our customers so that they see the tangible benefits to their business, such as quality in the meat produced and improvement in working conditions,"​ said Penfold.

Vietnamese experts say that despite the investment and compliance push, modern abattoirs are still the exception and not the rule in the country. "A slaughterhouse specifically for cattle has recently been set up in Vinh City [south of the capital Hanoi], but it’s still not modern like those I have seen in developed countries,"​ said Pham Kim Dang, vice dean animal science at the Vietnam National University of Agriculture, in Hanoi. "Most of the few modern slaughterhouses dealing with Australian livestock are not specialised in cattle, and their quality management is not really good,"​ he added.

As for Vietnam-raised cattle, Professor Dang said that most of these were sold to family-run slaughterhouses in villages. These slaughterhouses would typically distribute one or two cows per day, keeping no frozen stock.

"The Vietnamese mainly use fresh meat, unlike, for example, Australian consumers, who are used to frozen products,"​ he said. "This is because beef is still somewhat seen as a special treat, which, however, has become affordable also to ordinary people in recent years,"​ Professor Dang said.

After record turn-off in recent years, the Australian national herd is expected to decline to a 20-year low of 26.8 million head by July 2015. Developments in the Australia-China Free Trade Agreement (ChAFTA) could also affect future supply to expanding markets like Vietnam.

Negotiations for the ChAFTA were concluded last November. Although it imports a large number of Australian breeder and dairy cows, China is not currently accepting slaughter cattle from Australia. Negotiations are under way to reinstate the trade in slaughter cattle, however, and, once the ChAFTA is implemented, livestock tariffs for Australian exports to China will be reduced from 10% to zero over four years.

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