Tuesday 17th Oct, 2017

SPECIAL REPORT: Reefer Trades

Photo: Port of Darwin
Photo: Port of Darwin

THE Chinese market is calling to Top End producers and the Port of Darwin is gearing up to become the export point of choice.

Operator of the port, the Chinese-owned Landbridge Group, recently invested $11 million in upgrading reefer capacity, and the port’s management is now considering an extension to the East Arm Wharf.

The port’s capacity has gone from 50 to 190 reefer points and, depending on how existing and future trade develops, the port can increase that capacity to store 1000 containers.

“We’ve received, on average, 61 containers per month over the past two years. So far this financial year, we’ve averaged 81 containers,” said Captain Ian Niblock, acting chief executive of the Port of Darwin.

A large part of that growth has come from an increase in frozen meat exports, mainly coming from the AACo’s Livingstone Beef processing facility, situated 50km south of Darwin.

The largest market for AACo, which has the capacity to process up to 1,000 head of cattle a day out of Livingstone, is the United States.

The company has applied for permission to export meat to China, with an increase growing in Asia for AACo’s luxury branded beef products.

Darwin is seen as an excellent staging post given its port is seven days sailing to major Asian destinations, especially China, halving travel times from the major centres of Sydney and Melbourne.

“That AACo plant has the capacity to go to a second site which would nearly double their output,” said Captain Niblock.

“We’re busy talking to people who might be potential exporters. We’re also talking to other projects that are in the early stages of development, notably Project Sea Dragon,” he said.

The proponents of the project are planning to build a massive prawn farm on a remote cattle station in the Northern Territory. Due to make a final investment decision in the next six months, the project could begin producing prawns for export as early as 2020.

A spokesperson for the project confirmed that initial volumes would be in the region of 14,000 tonnes per annum, ramping up over several years to a maximum output of 125,000 tonnes.
While the Seafarms spokesperson said it was too early to confirm whether all exports would depart from the Port of Darwin, they said the produce would be shipped in reefers to ports most likely located in Europe, China and Japan.

Landbridge is also spearheading the development of a business park in the Northern Territory to promote trade and international business, as well as building a luxury hotel on Darwin’s waterfront.

“Logically there’s potential for an increase in tourism related to the hotel and the business park is there to try and promote future trade,” said Captain Niblock.

“We’re certain that Northern Australia has the capacity to supply other food types immediately north… some of that might be chilled, some might go in bulk.”

Captain Niblock said there was significant interest from China for both live cattle and frozen meat products, but also for buffalo and even donkey meat. However, 43% of the frozen beef departing from Darwin goes to the US, followed by 25% to Indonesia, a further 16% to Korea. In terms of live cattle, around 82% went to Indonesia in the past year and 12% Vietnam.

CEO of the NT Cattlemen’s Association, Tracey Hayes told Daily Cargo News, “Landbridge’s investment in Darwin presents an excellent opportunity for Northern Territory beef and cattle producers. It signals a solid commitment to a long- term relationship with Territorians.

“Landbridge hails from Rizhao city in the Shandong province providing an obvious partner to develop strong future trading links. It is conceivable in the near future that we will see Territory beef, barra and mango on the menu of Rizhao locals.”

Ms Hayes confirmed that frozen beef is currently not exported from Darwin. Rather, the product is exported from Fremantle and five ports on the east coast of Australia.

When asked when she would like to see exports from Darwin to China, she said “we would like to see a pilot within the next six months” but did not speculate on volumes.

“We have spent considerable time developing relationships for a supply chain into China including boxed product. The market potential is enormous and in order to meet customer requirements we need to be mindful of our supply capacity.

“We have been targeted in our approach in terms of geographical region and with potential customers that have an existing interest in the Northern Territory and our products,” said Ms Hayes.

It is actually the nature of the seasons in the Top End, just as much as market demand, which determine whether live export or boxed product generate the best return for producers.

“There is a window during the dry where cattle can be turned off. Throughout this period, cattle are generally not slaughter weight therefore ideal for live export,” said Ms Hayes.

She said that it’s not new for producers to seek alternate markets, which also predates the live trade ban in 2011.

“Critical for the survival of any industry that operates in an international commodity trading environment and with variability in seasons, market diversity and choice is essential.

“Those fortunate enough to produce a product suitable for both are in a position to minimise their risks somewhat,” she said.

“China is the obvious market for future export potential for Australian beef producers. They have the capacity to meet our terms of trade and population to drive demand.

“The challenge ahead for Australia is to educate the Chinese consumer that there is so much more to our suite of products than prime cut steaks,” said Ms Hayes.

Austrade and Meat & Livestock Australia have done good work in this area, she said but adds that there is still much more to be done.

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