Growing European interest in Asian beef markets

Growing European interest in Asian beef markets

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Ireland and the UK have been courting Asia as a destination for their beef exports.

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ON May 17, Japan lifted age limits on beef originating from those countries that were still under some form of restriction dating back to the BSE outbreak era of the early 2000s.

As with most other commentators at the time of the announcement, this column focused on the US as the major beneficiary of the change. The reason was simple. The US was Australia's biggest competitor in the high-value Japanese market and the move enhanced their competitiveness.

Canada was one of the other countries affected and it also stood to gain significant benefit due to its improving tariff structure (relative to the 38.5 per cent paid by the US) resulting from CPTPP membership.

But little attention was paid to the third beneficiary country, Ireland.

After all, Ireland exported just 840 tonnes of beef to Japan in 2018 worth just $US4.06 million compared with 330,000t from the US valued at $US2.07 billion.

But Ireland is a significant global player with total beef production in 2017 at 615,000t.

Importantly, 90pc of this is exported, which makes Ireland (according to their own claim) the world's fifth largest beef exporter.

The majority (51pc) of the 556,000t that Ireland exported in 2017 went to the UK.

The significance of this is the uncertainty that surrounds the UK as a continuing market for Irish beef after the UK leaves the EU.

As an EU member country, Ireland may face a tariff barrier in the UK if the relationship between the UK and EU devolves to WTO status as a consequence of Brexit.

But the EU has a trade agreement with Japan, which, like CPTPP, involves a progressive winding back of the level of Japanese tariff on beef.

Little wonder then that Ireland sees opportunity there.

To support its push into Japan, Ireland's Minister for Agriculture, Food and the Marine, Michael Creed, announced during his Asian trade tour last week that his department will assign Ireland's first-ever agricultural attaché to their Tokyo embassy this autumn.

Of course it does not necessarily follow that Japan will suddenly become Ireland's alternative market destination if Brexit plays out badly for them but the lifting of age limit restrictions does mark an important change in global dynamics and puts Australia on notice that competition, especially in high-value markets, can be expected to increase.

One other Asian trade destination that Ireland included in its tour was Korea.

Work on gaining beef access has been under way for some time with Ireland now at step five of an eight-step process.

However it is understood that a vote in the Korean Parliament will be required before Ireland can proceed to the next step.

Britain too has been courting Asia as a destination for beef and like Ireland the imperative is to help mitigate potential trade disruption associated with Brexit.

For its part Britain has been struggling for more than 20 years to overcome bans on beef exports imposed in 1996 as a consequence of BSE.

China lifted its 20-year ban on UK beef in June last year but it was only earlier this month that a Chinese delegation visited the UK to examine its supply chain in order to reaffirm protocols.

That visit was reportedly extensive and thorough and it seems that before the delegation even had time to get home and unpack, the green light had been given for exports to begin.

On Monday June 17 it was announced that the UK-China Beef Protocol had been signed by Farming Minister Robert Goodwill and Chinese Ambassador to the UK Liu Xiaoming.

First shipments are expected in the near future.

Perhaps as much a reflection of Britain's hard work to get back into the export game, the speed with which the protocol was signed is also an indication of just how keen China is to diversify its supply sources.

Better rates drifting north

WHILE the south continues to lead rates for meatworks type cattle on the east coast there is a discernable upward drift in prices occurring to the north.

MLA's report for Pakenham on Monday this week had heavy cows reaching 255c/kg and averaging 246, a rise of 17c/kg.

Wagga same day mirrored the trend with an 18c rise in score 3s but score 4s held firm at a 230c average.

These followed on from the stronger trend at Dubbo last Thursday where prime heavy cows were 15c dearer at a 220c/kg average.

But with southern Queensland works still reasonably well covered for cattle, the trend hasn't yet crossed the border.

At Dalby last Wednesday the best heavy cows were 5c cheaper at an average of 202c. However the same average price in the medium weights represented a gain of 8c/kg.

At time of writing there has been no substantive change in early Queensland markets but that may change as the week progresses.

Noticeably the major centres are continuing to yard substantial numbers of cows.

This is reflected in the weekly kill figures published by MLA which last week saw numbers return to the levels seen prior to the short week of the Queen's Birthday public holiday.

Eastern states were back up to 154,528 led by Queensland with 81,154, NSW with 35,370 and Victoria with 27,060.

Maintenance of high slaughter numbers through June points to a strong export result for the month. Progressive figures suggest around 100,000 tonnes.

Overseas markets remain strong and Steiner reported imported lean prices in the US last week were higher.

But they added that traders were finding it difficult to maintain this trend for product delivering later in the summer while domestic fed cattle prices continue to lose ground. August futures are showing a 16pc pullback on trading just two months ago.

Published and unpublished grass-fed grid prices in Queensland remain unchanged but rates in southern Australia are on the move.

One published grid in southern NSW increased by10c/kg on Monday taking 4-tooth ox to 555c and heavy cow to 460.

The story Growing European interest in Asian beef markets first appeared on Farm Online.

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