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Quality Meat Scotland (QMS) has called attention to the sensitivity of Scotland’s beef sector to imports, as the UK and Australia close in on a Free Trade Agreement (FTA).
While Scotland is a significant exporter of beef, QMS stressed the challenge of different supply chains demanding different types of beef products at varying price points. Although cross-border trade acts to balance out these demands, QMS warned that future UK trade deals could impact the home market, even if imports are in small volumes.
In contrast to Scotland, Defra’s UK meat balance sheets show that the UK as a whole is a net importer of beef, albeit that UK production accounted for a higher 86% of the product available for use in 2020, compared to an average of 81% between 2013 and 2018.
Iain Macdonald, QMS senior economics analyst, said: “With the UK and Australia entering the closing stages of negotiations on a Free Trade Agreement and increased beef market access being a key offensive trade interest for the Australian side, one concern for many actors within the UK beef supply chain is that a zero tariff zero quota deal would make the UK a much brighter prospect for Australian exporters, who would then find it economic to scale up their supply chains which are compliant with UK import controls.
“Given that the UK is also at a late stage of talks with New Zealand, in negotiations with the USA, and consulting on updating continuity EU agreements with Canada and Mexico, there must also be a concern that offering such favourable terms to Australia would set a precedent for trade talks with other major agricultural exporting nations.”
‘Limited opportunity for exports to increase’
QMS stated that despite being a net importer overall, UK traders export to countries with stronger demand than can be realised in the home market, such as lower value cuts of frozen beef to Hong Kong. Exports have averaged around 16% of annual production over the past decade, climbing to 18% in 2019 and 2020.
A further concern for the industry with the trade negotiations currently underway, according to QMS, is that they ‘seemingly offer limited opportunity for UK beef exports to increase to these markets, given their large domestic beef sectors and significant non-tariff barriers, including distance.
‘Due to the level of export activity, imports therefore make up a higher share of net beef supply than the gap between home production and total market supply would initially suggest. Over the past decade, we’ve seen import volumes average around 30% of total UK beef market supply, peaking at 32.4% in 2018 before falling back below 30% in 2019 and 2020.’
“However,” added Macdonald, “the multipliers used in these calculations to convert the product weight of imports into a carcase weight equivalent may understate the true level of import penetration. This is particularly true for imports from outside the EU, which have tended to arrive under reduced tariff or zero tariff import quotas for a small volume of premium cuts of boneless beef. A relatively small volume of beef from non-EU countries can therefore displace the higher value parts of a large number of home-produced beef carcases.”
HMRC import statistics show that between 2011 and 2020, imports of beef to the UK from non-EU countries have fallen sharply.
For imports from the EU, Macdonald noted that lower price points and much higher quantities suggest that these products are likely to have been beef for mincing and dicing, destined mainly for food manufacturing and event catering; though some will have been used in retail as a ‘value’ offer, including some steak cuts.