New Aussie trade deal is a significant cause for concern
While we generally welcome progress to freer trade, the new tariff-free quotas that the UK Government has granted to Australia for their beef and lamb exports are a cause for concern amongst farmers and meat processors. In particular the access that has been granted is not nuanced to take into account the negative impact that relatively small additional volumes of high value cuts can have on our market.
From year one, access for Australia’s beef exports will immediately increase from the current level of 3,761 tonnes to 35,000 tonnes; a more than eightfold increase. But by year fifteen, we will be allowing in 170,000 tonnes which represents a massive 45 times the current level of access. There’s a similar picture for lamb which will see imports rise to more than eight times the current level.
Greater access to Britain’s agrifood market is highly prized by countries like Australia who produce food on a much bigger scale than us. But this is just the first of many trade deals.
The hidden problem
While a 45-times increase in access for Aussie meat is an obvious issue for our domestic producers, there’s another hidden problem that few people are talking about.
Both the UK and Australian governments claim that there is no risk of Australian meat flooding the UK market due to limited supply and higher prices following several years of drought as well as strong demand elsewhere. But this does not take into account the fact that small volumes of certain products can have a major effect on our domestic market.
Peter Hardwick, BMPA’s Trade Policy Advisor explains: “It’s not the amount of meat by weight that matters it is the amount of high-end, high value cuts undercutting home produced product that will have a disproportional impact on the marketplace. It will skim the top off our home market and have a very negative effect on returns. It’s this part of the animal producers and processors rely on to remain profitable.
“A 20 foot container load of beef with 17,000kg of a full range of meat cuts might represent the meat from just 60 animals. A similar shipment containing only high-value boneless sirloins would have come from over 1000 animals. If it were fillet steaks it could be three times that number.
“In simple terms if as little as 7,000 tonnes were imported as sirloins it would take 20% of the UK’s prime beef production to produce here.”
Nick Allen, CEO of The British Meat Processors Association adds that “Quite what this deal will mean for the market in this country will depend on what cuts of meat the Government has agreed as part of the quota”.
Most countries negotiating trade deals work closely with their industries to get a clear understanding of what the impact will be on their own economies. However, there is little evidence to date that the UK Government has cooperated with industry to build this understanding.
The whole food industry is disappointed that the Trade and Agriculture Commission scrutiny committee that has been promised is still only in the early recruitment stage at a time when the first of the real trade deals, and one that will have many ramifications for future trade deals, has already been agreed.