![New access for Australian red meat to the United Kingdom has come at a time when food inflation is running at 19pc in Britain, close to the highest rate in more than 45 years. Picture Kelly Butterworth. New access for Australian red meat to the United Kingdom has come at a time when food inflation is running at 19pc in Britain, close to the highest rate in more than 45 years. Picture Kelly Butterworth.](/images/transform/v1/crop/frm/38U3JBx5nNussShT8aZyYjc/140bbe95-bc5a-46be-8b30-2310a2a3d6c9.jpg/r0_0_2048_1151_w1200_h678_fmax.jpg)
There has now been over a month of trading to the United Kingdom market since the June 1 start date for the Australia-United Kingdom Free Trade Agreement was announced by Prime Minister Albanese.
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Given the six to seven week shipping period to the UK, red meat exporters from that point were able to begin implementing their export strategies under the new import arrangements.
The Department of Agriculture, who have sole responsibility for the management of the new beef and sheepmeat quotas, facilitated any shipments already on the water arriving on or after June 1 to enter the UK under the new quotas.
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The new red meat quota system developed for the A-UKFTA has, from all reports, been working well. However as of June 16, of the 10 new quotas available under the new A-UKFTA, only beef and sheepmeat had been utilised.
There has been 295 tonnes of beef quota utiliised from the new 10,308 tonnes of allocated duty free beef access now available in 2023.
Importantly, 29 tonnes of First Come First Served beef quota has also been utilised in the first two weeks by what can be termed "new entrants" to the UK market.
This was what the new quota system was designed to encourage. These are probably the first new entrants in the UK beef market in a decade because the pre-FTA quota access to the EU and the UK was so small and tightly controlled, that a new entrant could not get access.
On sheepmeat, exporters now have two quotas to access the UK. The existing WTO UK Sheepmeat quota of 13,335 tonnes has already seen 8025 tonnes utilised, or 60 per cent of the quota for 2023.
As at 16 June, 378 tonnes of the new 14,726 tonne UK FTA Sheepmeat quota has also been used.
This new A-UKFTA sheepmeat quota is on a shipped weight basis so is far more attractive to exporters for boneless lamb shipments. Under the existing WTO UK sheepmeat quota, boneless sheepmeat shipments have to be converted back to bone-in for the purpose of calculating the quota used, even though the bone was removed back at the abattoir.
Beef shipments to the UK during the first four months of this year were fairly limited given the 20pc import duty. Only 258 tonnes of beef was shipped over these four months.
Since the announcement in early May, beef shipments have doubled on a monthly basis, albeit from a small base but it reflects the changing opportunity that the new zero tariff FTA beef quota offers.
The new access arrangements, however, come at a difficult time with recent data showing food inflation running at 19pc, close to the highest rate in more than 45 years.
That has prompted the UK government to explore striking an agreement with supermarkets to voluntarily limit prices on basic items like milk, bread and meat. The plan has met with fierce pushback from retailers and if history is any guide, price controls of this type seldom work in limiting inflation.
Feedback from exporters suggest that in response to these inflationary headwinds they have been trying to introduce the cheaper cuts to the UK market that exporters in the past would not have looked at due to the quota constraints before the FTA.
Issues around access to Northern Ireland ,especially as a result of the Windsor Framework agreement with the EU earlier this year, is still unclear. DAFF advise that there have been no applications to ship directly into Northern Ireland under the new quotas to date despite it being part of the UK.
No doubt UK importers are being cautious until there is more clarity.
If Ausralia is going to maximise the new quota access. especially with beef, it will have to be competitive against an aggressive Republic of Ireland.
In early June the Irish Food Board (Bord Bia) placed a new UK meat market specialist in London. Over 43pc of Irish beef exports go to the UK and they are looking to protect, if not expand, on that market share.
Since the FTA came into play, one of Ireland's largest meat processors, the ABP Food Group, also moved to strengthen its position in the British beef processing industry. It purchased one of Scotland's flagship independent processors Scotbeef, raising UK farmer concerns about the increasing Irish concentration in UK processing.
While NZ access for sheepmeat to the UK continues at levels double Australia's new access, over 50pc of NZ lamb exports now go to China, As a result they have been unable to fully utilise their sheepmeat quota access into the UK, or the EU for that matter for almost a decade. This is another opportunity that is encouraging for Australian exporters.
Extent of shipping marks issue
We have reported before on the significant increase over the past year in the number of US rejections of Australian red meat products in the US due to errors on shipping marks across beef, sheepmeat and goatmeat.
Figures now released by the US Department of Agriculture suggest that increase has been in excess of 80pc involving close to 600 tonnes of meat and meat products.
While DAFF has sought approval from the USDA, to allow the rectifying of incorrect shipping marks through the Meat Messaging protocol, the USDA has made it clear that correct shipping marks remain a requirement verified on arrival.
New technology systems will allow, at some stage, the opportunity to seek US agreement to remove shipping marks as old technology in favour of alternative traceability systems such as barcodes as used by Meat Messaging.
Until then it remains essential that trading partners maintain trust in Australia's systems and capability to meet import country requirements.