China is hungry for Australian beef, but every second kilo shoppers buy could be fake

The Chinese appetite for beef has reached unprecedented levels, with Australian exports to China up 73 per cent on last year, making it our biggest export market for beef.

Chinese consumers are prepared to pay hundreds of dollars a kilogram for the right cut of steak from a country they trust, but often don’t get what they think they’re buying.

PricewaterhouseCoopers (PwC) estimates that every second kilogram of beef sold in China under the banner of being Australian isn’t Australian beef.

PwC agribusiness leader Craig Heraghty said it was notoriously difficult to put a finger on the exact meat fraud figure.

“Based on clients we have spoken to who are selling red meat into that market, based on distributors on the mainland and based on discussions with feedlotters serving the Chinese market, we have come up with that estimate — and it’s probably a lowball estimate,” he said.

Warwick Powell, founder of Brisbane-based company Beefledger, said China-based industry insiders were developing a view that for every 10 kilograms of beef sold, 1 kilogram is actually what it claims to be.

It either doesn’t originate from the country it claims to come from, is not the cut of meat it claims to be, or is not beef at all.

“It could be pork, duck breast or horse,” Mr Powell said.

Katherina Li, founder and chief executive of Beijing-based e-commerce platform Liberty Post, agrees food fraud is a big problem undermining consumer confidence in China.

“There is a very high risk of fake product by using cheaper products that pretend to be Australian beef,” she said.

“It’s a well-known tactic here.”

Using tech to combat fraud

Mr Powell’s company is launching a blockchain program in China later this month to ensure customers buying Australian beef can be confident they’re getting what they’ve paid for.

“We are putting the systems in place that minimise the risk of ‘fake steak’ being delivered,” Mr Powell said.

He said the high-tech system will verify all aspects of the beef supply chain from the feedlot to the fork.

With support from Food Agility, a co-operative research centre funded by the Federal Government and industry, Beefledger is employing a digital system using ‘smart contracts’ to replace forgeable letters of credit.

Information about cattle location, health, transport and processing is uploaded into the Beefledger blockchain interface at every point in the supply chain.

“Blockchain is a decentralised technology that stores data through a consensus process where many people are involved in affirming the data and it is very, very difficult to change or alter it afterwards,” Mr Powell said.

He said new technologies do much more than track provenance though.

“We can secure data to track the conditions of transport, more accurately predict shelf life and use-by dates and connect consumers with producers,” he said.

“We can also encourage members of the supply chain to do the right thing by offering incentives through newly established cryptocurrencies.”

Anyone in the Beefledger community can participate in the network by purchasing BEEF tokens.

Beefledger, which sent its first batch of beef to China last year, will showcase its high-tech system in a six-city roadshow in China from November 18.

It’s a timely launch. Last week Chinese President Xi Jinping called for faster development in blockchain and cryptocurrency in China.

“In China, we believe blockchain technology is the future for tracking food and fighting fraud,” Ms Li said.

“That’s why we are pleased to have Beefledger products on our platform.”

PwC’s Mr Heraghty praised companies trying to give honest information to verify origins and authenticate meat but had a warning.

“The weakest link in the chain is not blockchain or any technology, the weakest link is the piece of sticky tape that puts the label on the package,” he said.

Where there is human involvement, there can still be a substitution.

“You have to think like a fraudster and see where you can copy a label or a QR code,” Mr Heraghty said.

“I’m not talking about Beefledger here, but the illusion of traceability is a worrying trend I see.”

Watch this story on ABC TV’s Landline at 12:30pm or on iview.


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