BEEF suppliers around the world collectively are becoming greater exporters, giving way to the argument one of the key tools for international meat trading, tariff rate quotas, are no longer up for the task.
Australian red meat trade experts believe TRQs - the placing of a threshold on imports for a set time - can work for the beef trade, rather than against it, but they need to evolve.
International business manager for Europe and Russia with Meat and Livestock Australia Josh Anderson presented the Australian industry’s perspective of how reform might best take place to the World Trade Organisation at a meeting in Geneva this week.
Brussels-based Mr Anderson outlined two key areas where issues consistently arise - underfill and the complexities of administration - and put forward some ideas for rectifications.
“As a starting point there is some low-hanging fruit here that can be achieved relatively painlessly,” he said.
“Quick wins can be achieved through simple commitments to a meaningful underfill mechanism - report TRQ fill rates, benchmark performance, identify and justify underfills.
“Further challenges are to develop a consistent approach to administration.
“There are some administration methods that are hardly used. Can we see some rules around consolidating these?
“Is there a commercial way to reallocate country specific unused TRQs, even on a temporary basis?
“And eventually, the elimination of all agricultural TRQs in replacement for a more liberalised approach would greatly benefit global agriculture trade.”
Exports were the lifeblood of the Australian beef industry, Mr Anderson explained.
“Last year we sent approximately 70 per cent of our beef offshore to over to 70 countries worldwide,” he said.
“Despite having bilateral free trade agreements with a number of our large trading partners there are still a substantial number of countries we trade with through WTO rules.”
Australian beef suppliers see a growing appetite and demand for beef globally.
“By 2027 we expect global beef consumption to increase to over 80 million tonnes, driven predominantly by Asia,” Mr Anderson said.
“As beef exporting countries scramble to meet this increasing demand it will displace product in more traditional import markets and there will be greater supply gaps.
“To fill shortfalls domestically as less is available from traditional suppliers, we will see the emergence of other suppliers and hence the global trading dynamic will shift.
“Collectively we are all becoming greater exporters of beef.
“Globally, in 1960 on average just under 5pc of beef was exported. In 1994 this was 13pc. Today it is 20pc.”
Mr Anderson said in Australia’s experience the current form TRQs were not an effective mechanism to facilitate trade.
“The beef trade is dynamic and we certainly have not seen TRQs evolve at the same pace,” he said.
“We are advocates for trade reform and TRQs are no exception. We must work to ensure that TRQs are managed in the spirit in which that they were created - that is to facilitate trade.”
WTO data shows some countries fill beef rates at 50 per cent or below.
“There are quotas in the beef trade that historically could be classified as chronically under-utilised. For the Australian industry, that is opportunity lost,” Mr Anderson said.
“And in a perfect world we would have a silver bullet administration method that was best practice and could solve the issue of utilisation but unfortunately this does not exist.”
While acknowledging the challenge the WTO faced to best juggle many interests across many sectors, Mr Anderson said there was action it could take to benefit the global beef trade.
He broke it down to three key themes: principles, transparency and management.
Full utilisation should be the aspirational target of all TRQs, he said.
“This requires the issuing country to administer in a way that creates the highest probability of fill,” Mr Anderson said.
“TRQs have to be allocated to an entity where there is a high likelihood it will import.”
Consistent, transparent and simplistic regulation of TRQs was absolutely paramount.
The more open and simple, the less burdensome to comply and the greater chance of improving fill rates, Mr Anderson said.
Transparency was also key, he said.
“If a country has a TRQ, they are obligated to report officially on the fill rate in a timely manner - disappointingly many countries are not living up to this obligation,” he said.
“We now live in a fast-moving information society whereby there is an expectation on business, industry and government to be as transparent as possible.”
Evaluation was the next step.
“Where there are underfill issues, determine the cause. In some cases there may be a legitimate reason for underfill such as increased domestic production, low demand or disease,” Mr Anderson said.
Who dominated beef trade through the decades
- 1960s: Argentina, Australia and the European Union
- 1970s: Arg contracts, EU expands
- 1980s: The United States begins to emerge
- 1990s: EU recedes, Aus and US expand
- 2000s: South America expansion and the emergence of India.
- 2018: Top four exporters will be Brazil, US, India and Aust.