13th December 2013

Increased Productivity Needed to Grasp Export Opportunities in Years Ahead

In recent months there have been a number of announcements about exciting new potential export markets for red meat.

According to Stuart Ashworth, Quality Meat Scotland’s Head of Economics Services, these announcements send a signal of long-term confidence to livestock producers about the opportunities which lie ahead, though it will take time before the political protocols become physical trade.

One real challenge, he said, was the need to increase productivity to ensure supplies of product are there so these opportunities can be grasped as they develop in the coming years.

The main driver behind the steady growth in global demand for red meat is, said Mr Ashworth, the growing global population coupled with some recovery in economic fortunes.

“The Food and Agriculture Organisation has stated that global demand for meat will increase by more than 10% by 2022 but that most of that growth will be in developing countries.  The consequence of that is that global trade will increase,” he said.

This potential demand has resulted in several announcements over the past few weeks in respect of developments of European Union or UK trade partners.  Examples include the agreement in principle between the EU and Canada, the US announcement of a relaxing of rules on beef imports, the start of trade talks between the EU and the USA and a UK announcement of a trade deal with Singapore.  Meanwhile discussions continue in respect of trade with Russia and Japan and expanding agreements with China beyond pigmeat.

“All these announcements hold out the potential of exciting opportunities for exporters and producers. However, of all these announcements the most advanced relates to Singapore where several UK plants have been approved by the Singaporean authorities to trade beef with them.

“The reality is, however, that in the case of Canada it is expected to take up to two years before an agreement in principle becomes an agreement in practice.”

If agreement in principle is reached between the EU and the US the expectation is that it may take some four years before physical trade takes place, observed Mr Ashworth, because of the time taken to convert a political agreement into a workable protocol requiring meat plants to gain the necessary approvals that would still be required.

“The argument works equally well in reverse.  The best example is probably Brazilian beef, which is not excluded from the EU or UK market but effectively the Brazilians choose not to trade with us because the individual abattoir and animal protocols and tariff rates are considered to be too onerous, time consuming or expensive to make it worthwhile.”

When it comes to discussing international trade, two topics dominate proceedings, observed Mr Ashworth.  One is the minimisation of tariffs which act as a tax to increase the cost of importing meat into a country. The European Union is considered to have some of the highest tariff restrictions in the world, to shelter domestic producers from global prices.

The second topic of discussion is the scientific basis used to restrict trade with countries for animal or human health reasons where topics like FMD, BSE and methods of cleaning meat with, for example, chlorine solutions or lactic acid are discussed.

One advantage of European Union membership, he observed, is the large single market that exists which allows the UK to supply significant quantities of beef and sheepmeat to fellow member states with minimal administrative frustration and cost.  A second, although under intense global pressure to reform, is the shelter that EU tariff barriers offer beef and sheep producers.

“International global trade is a complex topic with significant timescale between a political agreement and the physical trade taking place.  However, the increasing discussion of bilateral and multilateral agreements illustrates the growing potential of international trade for the Scottish livestock industry,” said Mr Ashworth.

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