Denmark's carrot and stick approach to methane reduction

The move was reported as a collaboration with Netherlands-based nutrition company Royal DSM, the developer of Bovaer who gained approval for its use in the European Union in 2022.

Despite reservations from some politicians and animal welfare groups, the move was seen as an indication of the seriousness of the government's commitment to reduce greenhouse gas emissions by 70 per cent by 2030.

But barely two months later, Denmark upped the ante last week with the announcement of a tax on livestock methane emissions to apply from 2030.

From that date, Danish livestock farmers will be taxed 300 kroner (A$65) per ton of carbon dioxide equivalent. The tax will increase to 750 kroner (A$160) by 2035 but will be partially offset by an income tax deduction allowance.

With estimates in the range of 2-6 tonnes of CO2 equivalent per year produced by typical Danish beef and dairy cows, the impost, even with the tax deduction, is enormous.

For the owners of the country's 1.4 million cattle, including 550,000 dairy cattle, this announcement would appear to herald a major industry and life changing event.

As such it would seem logical to expect some backlash to the announcement given the recent protests across Europe by farmers against climate change mitigation measures and regulations which they say are driving them to bankruptcy.

But on this score, Copenhagen is strangely quiet.

Media reports suggest the centre-right government reached what was termed a historic compromise with representatives of farmers, industry and unions and welcomed by nature conservation and environmental organisations.

As to how the tax money raised is to be spent, media reports quote the government saying that it will be returned to industry to support its green transition.

The proposed tax is yet to be approved by parliament, but the bill is expected to pass due to the broad-base consensus.

The bill also provides for the establishment of more than 600,000 acres of new forest areas so it would seem there is an inevitability that the new tax will mean fewer livestock and more trees.

But 2030 is a long way away and, as happened in New Zealand where a similar tax was proposed, a change of government could see it undone. In that regard, much will depend on whether the rest of the EU moves in parallel with Denmark or leaves it stranded and disadvantaged in isolation.

SEVERAL months ago, the United States Meat Exporters Federation highlighted a push by its members to increase beef muscle-cut exports into the Middle East.

The US enjoys a significant trade in variety meats (offal) to Egypt but only modest volumes of muscle cuts into other ME destinations.

Looking at the most recent USMEF compiled statistics, it appears they have achieved some success. Year-to-date figures to April show an 80pc increase to UAE, 178pc increase to Kuwait and 204pc increase to Qatar, but off low bases.

As a direct competitor of the US, Australia also has interests in the Middle East, so it was good to get a closer understanding of the nature of the market from an experienced trader.

The first point he made is that the ME beef market is primarily either Angus or cow. The US has been successful in the Angus segment with its CAB brand in Qatar, Kuwait and UAE but it faces several difficulties.

Labelling and halal requirements exclude a lot of US sheds, while US pricing structure and primary focus on their domestic trade appears to limit how far forward they are prepared to quote. He said Australia's ability to quote longer positions out to six months was advantageous for chefs and food service users who want to fix menus. He added he has also seen more variability in US price throughout the year compared to Australia and that had helped Australia to grow its presence. Russia has also increased its presence with considerably more Miratorg product in ME now.

In the retail space, the huge LuLu and Carrefour stores move the volume.

This is mostly cow cuts traded simply on processor name such as AMH, Teys, Kilcoy and Midfield and preferentially sourced from southern and central Queensland for reasons of meat and fat colour.

In this area, Brazil is emerging as Australia's biggest threat with its ability to sell into the market at half the price of Australian product. Fortunately, buyers still retain a preference for Australian name product because of the acceptable level of quality it represents. Brazil, on the other hand, encounters some resistance at retail level possibly because of consumer tendency to associate lower price with inferior quality.

DOMESTIC lean beef values in the US continue to surge with Steiner reporting a 7c/lb rise last week taking 90CL boneless to US371c/lb. Ongoing uncertainty about lean beef supply later in the year is causing US end users to pay up in the near term to get their needs covered.

This is keeping upward pressure on imported beef prices with 90s quoted at US297c/lb FOB, also up US7c/lb. For the time being the big discount between imported and domestic remains but that could start to narrow with decline in New Zealand supply in Q3.

Meanwhile, up to 100 millimetres of rain in the coalfields region of central Queensland and lesser falls elsewhere has tightened saleyard prices and caused some shuffling of direct bookings. One central Queensland plant is expected to lose a day this week and there are reports of 12mm being enough to prevent trucks getting into a western property, forcing cattle to be walked out.

Southern buyers are active in the markets as well as buying over the scales as far up as Winton. For the moment southern Queensland grid rates are quoted at 500-510c/kg for YP ox and 430 for heavy cow but are expected to be reviewed this week.