The present industry / supply chain structure in the Australian beef sector tends to see pricing power concentrated in the downstream retailing sector. Producers are, therefore, in essence “price takers”.
Consumer research and anecdotal evidence indicates consumers are willing to pay a premium of 12% to 40%+ for meat with desirable provenance. This research is based on findings in Australia and America. Chinese consumers already pay significant premiums for imported beef.
Chinese demand for beef has a big “catch up” gap to fill. Presently China consumes on average 6kg of beef per person each year, compared to Singapore (~38kg) and Hong Kong (~57kg). As China’s middle class increases, we can expect significant consumption growth as its consumer behaviors increasingly look like those of Singapore (and possibly Hong Kong).
At consumption volumes comparable to Singapore’s, this is equivalent to an estimated 44.8MT of additional beef per year. Australia slaughters approximately 7m cattle annually, with yields of an estimated 1.96MT.
Food fraud and food safety are key issues in China. Consumers rate provenance and quality as key consumption drivers for imported product. Globally, food fraud is an estimated US$40B per year business. A large proportion of this is found in imported food fraud in China. Imported meat is a prime candidate for substitution fraud.
An integrated blockchain-enabled credentialed provenance and payments platform enables Australian producers to secure a position as global leaders and “product of preference” amongst discerning consumers. The payments system, anchored to provenance, enables the creation of additional value and its fair distribution throughout the entire chain. In this regard, high quality producers become “market makers” through their pursuit of excellence.
