Low-cost option for beef production
Low-cost option for beef production
Sln Meat Supply is gearing up to become the first local company to process and export Australian beef from live cattle imports this fall.
The Post’s Xueying Chen spoke with Ross Ainsworth, former CEO of Northern Territory Livestock Exporters Association, this week about the potential for Cambodia’s upcoming beef export industry in the Southeast Asian market.
What is happening in Australia that would make the slaughterhouse in Cambodia a good idea?
The Cambodian slaughterhouse, if they produce a good volume of beef, can easily be sent by road into China through Laos and also supply other high end hotel restaurants abroad.
Basically they can send the stuff in there with or without permits.
Australia has big tariffs and production costs are extremely high.
Cambodia’s costs to process the beef would probably be about one-fifth or less of the costs that exist in Australia.
Also, the byproducts, such as the eyes, the ears and head that aren’t particularly valuable in Western countries are valuable in Asia.
Are you talking about illegal smuggling of beef and live cattle?
Yes, if they get the appropriate permit, they can send live cattle and meat.
It’s physically easy to do because the roads are very easy to get through to Laos and then China.
There may be some smuggling going on, there could also be legal trade.
Most of the moving around of animals in Southeast Asia is totally illegal today, but that’s just the normal course of business.
What are the challenges for Cambodia in lifting this industry off the ground?
It’s a complex technical process, and then there’s a lot of training of the staff, but that’s available with planning.
You also have to get the cattle in. Cambodia has importation difficulties and facilitation costs are exceptionally high, especially going through the ports.
This makes transportation difficult. Now that’s a major negative to importation.
What potential do you foresee in Cambodia raising its own cattle?
There’s the market to sell beef. Previously, there was a very poor market because Cambodians don’t eat a lot of beef since their annual income is quite small.
But as they get richer, there will be an improving market, but essentially the market is outside of Cambodia.
Cambodia is the farm and production warehouse rather than the main consumer.
Cambodia has the potential for extremely low costs for production, that’s the benefit. Low cost land, low cost labor and low cost agricultural waste product.
What are the challenges to Cambodia raising its own domestic herd?
Everything. They haven’t done this before so it’s a whole new industry. It’s fresh.
They don’t have a very big domestic herd. It’s all been sold to Vietnam.
There are very few cattle left so you have to start again.
Major investors right now are creating feedlots and breeding facilities to increase the herd.
Is it possible for Cambodia to become domestically independent in the future?
The demand is so high in the whole area it would be difficult because to breed such a herd takes a very long time.
It takes nine months to have a baby, and they take two years to grow up.
Then the female takes another year to have a baby.
Cambodia can head in that direction, but it will be extremely slow.
What about the export market potential in Southeast Asia for Cambodia?
At the moment, the customer is your immediate and very close neighbor, Vietnam, specifically Ho Chi Minh.
There’s massive demand for beef in Ho Chi Minh. All of Cambodia cannot hope to supply Ho Chi Minh, which imports cattle from Myanmar, Thailand, Laos and Cambodia.
But it’s still not enough so they import additional numbers from Australia.
Cambodia is extremely well placed in this new market arrangement.
Up until 10 years ago, China was exporting beef and live animals into Southeast Asia, mainly Thailand and Vietnam.
Now it’s the reverse, they’re taking large numbers of live animals and beef out of Southeast Asia into China, and it’s not enough.
That why the prices have gone up so high.
