Wednesday, 17 July 2013

Why the UK imports lamb from New Zealand

While the UK is technically self sufficient in sheep meat, we continue to import large quantities, primarily from New Zealand.

In 2012, for example, the UK imported 86,100 tonnes product weight of sheep meat, 73 per cent of which came from New Zealand. During the same period the UK exported 94,700 tonnes.

A question we’re often asked though is, ‘if we’re self sufficient, why does the UK import so much sheep meat?’ The reasons are numerous and complex but can broadly split into four areas – historic, market, seasonal and economic.

The UK has been importing New Zealand sheep meat for 130 years, with unrestricted imports until 1973 when the UK joined the European Economic Community (EEC). At the time, the UK was only circa 40 per cent self sufficient. To give it some context, prior to joining the EEC, the UK took the vast majority of New Zealand’s lamb exports – 86 per cent in 1970. Today the UK takes around 20 per cent and in 2012 China overtook the UK as the primary destination for New Zealand lamb.

From 1972 to 1999, the UK sheep flock grew from 27.9 million head to 44.7 million head, with the UK’s self sufficiency rate increasing to 95 per cent to coincide with increasing production. Increasing production drove rising UK export volumes and, despite a fall in the 2000s, today the UK exports around 100,000 tonnes.

However, while the UK market is technically self-sufficient, it is not functionally self sufficient. The UK demands a larger volume of higher end cuts such as legs and chops, while UK exports consist mainly of carcases and a large proportion of low value cuts to emerging markets.

Most UK imports, particularly from New Zealand, are frozen, which is generally cheaper and aimed at providing a wider range of choice and availability for consumers. The vast majority of UK exports are chilled and includes product the UK market does not usually consume, highlighting the need to export. A drop in UK imports from New Zealand would likely result in a drop in UK sheep meat consumption.

The UK sheep sector continues to be subject to a very seasonal pattern. The bulk of production takes place in the second part of the year and does not necessarily coincide with domestic demand. At Easter, for example, New Zealand production peaks to coincide with UK demand. The complementary seasons allow grass-finished lamb and new season lamb to be available all year round, and the use of imports also allows lamb to maintain shelf space throughout the year. Ultimately, the balance of imports and exports helps iron out demand and supply peaks in the UK sheep industry and is therefore beneficial to the sector.

The dominance of the major supermarkets in the UK retail sector allows a wider range of sheep meat consumption, generally through a cheaper retail price and increased promotional activity.

So far in 2013, the UK is the second largest importer of sheep meat in the world, while holding its position as the third largest exporter globally. However, if it weren’t for imported product, we would likely see a decline in domestic consumption, rather than a large scale switch into domestic product due to surplus sheep meat being the wrong type of product, lack of availability at the right time and being priced above the reach of some consumers.

When you look at the bigger picture, it’s a question of striking the right balance between imports and exports to satisfy domestic and global demand, while maximising returns for UK producers through full carcase utilisation.

Wednesday, 10 July 2013

Why EU-US negotiations on free trade is so important

This week saw the start of negotiations on an EU-US free trade agreement that could ultimately prove to be hugely beneficial to the UK beef and sheep meat sector on a wider global scale.

Putting arguments between the US and some member states about who may or may not be spying on whom to one side, the negotiations are clearly a potentially lucrative step in the right direction. For agriculture, the aim is to remove duties and to tackle non-tariff barriers.

The EU is the US's largest trading partner, while the US is the EU's second largest trading partner, with 17.6 per cent and 13.9 per cent respectively of each other's trade in goods in 2011. It is estimated that a free trade deal could lead to a 28 per cent increase in EU exports to the US and a 6 per cent increase in total EU exports.

Together, the EU and the US account for almost half of global GDP and one-third of total world trade. Latest estimates show that a comprehensive trade and investment agreement could also increase EU GDP by between 0.5 per cent and one per cent – €86 billion of added annual income for EU economy.

Specifically, for the beef and lamb sector, the negotiations are seeking to address a number of issues, the benefits of which to the UK could reach well beyond the US border. Aims include getting as close as possible to removing all duties and other barriers on agricultural products. It is also looking into ‘behind the border’ obstacles to trade such as different safety standards, particularly the negotiation of an ambitious agreement on sanitary and technical barriers to trade.

As to the benefits for the UK, there is no doubt there are definitely high-value, niche opportunities for beef in the US market. Perhaps more significant, however, are the implications it could have for our trade relationships with other Third Country markets. We often hear how these other countries take their lead from what the US does. Although not cut and dried, an agreement between the EU and US would almost certainly pave the way for positive outcomes when we negotiate on market access for our products with these other countries.

As ever, it is important not to get carried away. While an agreement with the US would be a great stride forwards, a sense of realism has to be retained. Should an agreement be reached, it would allow us to enter into a process with the US authorities to secure individual plant approval for exports. As it stands, there are currently no USDA-approved beef plants in the UK.

Experience tells us that nothing happens overnight on such complex matters. As such, exporting to the US won’t happen immediately but these talks are a step in the right direction.

Further information on the negotiations can be found by clicking here.

Thursday, 4 July 2013

Long-term approach to tackling Bovine TB under the spotlight

Debate around bovine TB – specifically, its impact and measures to tackle it – hasn’t been far from the national headlines for some time.

This week saw the publication of Defra's Draft Strategy for "Officially Bovine Tuberculosis-Free" Status for England with the aim of making it bTB free in 25 years.

The statistics speak for themselves. The spread of bovine TB led to the culling of 37,754 cattle in Britain in 2012 – up 10 per cent on 2011. The draft strategy cites that in England alone last year, 28,000 cattle were slaughtered as a result of the disease. The gravity of the situation is clear, which is devastating for the farmers affected. Costs are also highlighted with the cost of a bTB breakdown estimated at £12,000 to a farmer.

Much debate has centred on the pilot badger culls. It remains a highly emotive issue. However, while TB levels remain significant in our wildlife population – notably the proven reservoir of TB in the badger population in some areas – the disastrous effects felt in some areas by farmers are not going to go away unless it is acted upon.

Defra’s draft strategy references the development of new techniques, such as badger and cattle vaccines, and new diagnostic tests that could one day offer new ways of tackling the disease. It does stress, however, that a cattle vaccination programme is some way off.

Its principal aims include preserving the low risk of bTB in the north and east, reversing the spread of the disease at the boundary of High Risk Areas (HRAs) and Low Risk Areas (LRAs), and reducing the level of infection in the High Risk Areas (HRAs) identified in the South West, West Midlands and East Sussex. It highlights the need to use all available tools to do so.

If the examples of successful programmes to tackle bTB cited in the draft strategy are anything to go by, there is cause for optimism long-term. In all cases, the importance of stringent cattle control measures, coupled with tackling the primary wildlife reservoir, have been paramount. Australia achieved official bTB freedom in 1997 after a campaign lasting nearly 30 years. Michigan successfully reduced the average annual number of livestock herds affected to single figures since 2005. In New Zealand, the number of affected herds reduced from 1,700 in the mid 1990s to less than 66 in 2011/12. The proportion of herds affected annually in the Republic of Ireland reduced from 9.6 per cent in 1995 to 7.4 per cent in 2010.

It’s time to move forwards to tackle what has been described as ‘the most pressing animal health problem in the UK’.