Wednesday, 7 December 2011

Breaking the economic pain barrier in Olympics year and beyond

Economic pain, more spending cuts, a one-in-three chance of recession in 2012. Yes, the Chancellor’s Autumn Statement wasn’t exactly the tonic to get us all in the festive mood. But before we all dive for cover from the Four Horsemen of the Apocalypse galloping over the horizon, there are some potential positives for the beef and sheep sector.

The Government will be launching a food and drink action export plan next month. ‘So what?’ the cynics may say. Well, the real nuggets are that it will reportedly include development of a cross-Government strategy on removing animal health trade barriers in key markets such as China and Russia and introduce steps to reduce obstacles to UK food exports. Certainly a step in the right direction and one which underpins EBLEX’s ongoing commitment to developing export opportunities for UK beef and lamb. In addition, a summit will be held in March 2012 to boost innovation in small agri-food businesses.

Both Russia and China are huge potential markets. The importance of securing an export certificate to China cannot be overstated but the process is both lengthy and complex. BSE’s legacy continues to present a challenge but EBLEX has been working to develop market access, with a recent delegation to China and, even more more recently, participation in a meeting with five top vets from the Henan Provincial Animal Husbandry Bureau. At that event, questions were pointed towards China becoming more self sufficient in beef and independent from imports from Japan, the USA and Canada. This would, however, reportedly require production in China to more than double. If an export certificate for the UK could be secured, the opportunities speak for themselves.

As for Russia? Next week (December 15th-17th) will see unanimous political endorsement of Russia’s World Trade Organisation (WTO) accession at the 8th WTO Ministerial Conference. Russia’s accession is especially important for the EU. It is the EU’s third largest trading partner after the USA and China, with an 8.6% share of EU trade in 2010. It is also believed that Russia’s entry in the WTO will have an estimated value for the European Union of €3,900million.

The EU is the second largest beef exporter to Russia but again the UK can’t benefit from it due to a continued BSE-related ban.  As such, part of EBLEX’s ongoing export strategy to secure new market access to optimise returns for producers and processors in England, is to work to open the Russian market. As we’ve said before, resuming beef exports to Russia could be worth around £115m to the UK in the first three years and that’s based on a conservative 2% market share.

Inevitably the majority of post-Autumn Statement headlines have been all doom and gloom - understandably so for many. The food and drink action plan could however give us cause for optimism, not least by building on and support the hard work the beef and sheep meat sector has already been doing to help drive exports forward as we move into 2012.

To read more about EU trade relations with Russia click here.