EU beef trade, alternative proteins and meat prices: Over the Hooks

Selling into the EU has also meant a range of additional barriers and costs in order to gain entry to the 27-country Customs Union.

These have included such programs as the EU specific EUCAS system to ensure HGP freedom in cattle, the higher cost of being an EU-accreditated meat processing facility in order to service the market and a tightly controlled paper-based product certification system.

The higher value per unit return relative to other markets has always helped to counter these additional costs.

In April this year however Australia entered into a new era with the EU with the implementation of an electronic certification (eCert) paperless exchange with the Customs Union.

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This is an important step forward in support of the trade in red meat from Australia. We have been a leader in this field, offering the first system-to-system paperless exchange for meat in the global trade.

There has been some teething problems along the way and EU quota certificates are still not part of the system but the new paperless trade will be much simpler, more efficient, less costly and much more secure.

The paper-based system of the past meant that hard copies of health certificates had to be printed for every shipment to the EU at quadruple the cost of the electronic ones. An added complication was that EU rules don't allow the health certificate to be printed until after the shipment has sailed - a number of shipments over the years have been forced to be returned to Australia at great cost when this requirement has not been met.

Once the shipment was underway it required a flurry of activity to have the certificates printed and picked up by a courier (if it was a work day and government offices were open) and then sent to your EU customer by courier in time for them to present the documents at port of entry - an added concern if it was airfreight.

It meant a big reliance on courier services and at a substantial cost - with the added risk of documents getting delayed or sometimes lost in the system.

With eCert, document security is far greater, cost is reduced, translation into the importing country's language is automatic and certificates arrive on time.

The new arrangements cover the 27-member countries of the EU as well as the other countries in the EU single market which includes Iceland, Liechtenstein, Norway and Switzerland.

Interestingly, as they have left the EU, the United Kingdom is not included and while the FTA with the UK will open up substantial new trade opportunities, it will still require hard copy certification for now.

Meat processors from all over the world, including a number of Australian packers, attended IFFA (the international trade fair for the meat industry) in Frankfurt Germany in late May. There were 860 exhibitors from 44 countries and visitors from 129 countries.

This is the global home of innovation, automation, digitalisation, food safety and technology for the processing sector.

Apart from the obvious benefits of networking face-to-face for the first time since 2019, there was a recognisable heightened interest in alternative proteins and the growth future and potential of this newly energised sector. Despite ongoing questions over cost and profitability along with questions being asked in the UK and elsewhere over untested claims on its environmental credentials, alternative proteins are the new player that will be fighting for a share of consumer demand.

Many of the major US meat packers have already invested in this sector as have some in Australia as well, seeking to stay on top of the latest trends and the technology needed to compete with or in that sector.

On-time delivery is critical for export meat shipments, especially when the product is chilled with a specific shelf life.

In this column, we have earlier reported on an Australian container of beef to Chicago in the US late last year that normally took 25 to 30 days to arrive at its destination. It

eventually took 70 days including 24 days sitting off the Port of Los Angeles waiting for the ship to get a berth. Delays and port congestion have been major factors in rising transport costs and product losses for exporters, especially where shelf life has been compromised.

The port congestion issues in the US are starting to subside but this may be the calm before the storm. As of June 2, only 25 container vessels were waiting for a berth off the Ports of Los Angeles and Long Beach on the US west coast (the biggest ports in the US), down from 109 ships in January of this year and the lowest level in a year.

China's exports surged in May as the easing of Shanghai's COVID-19 lockdowns allowed factories and ships to catch up on stalled orders.

Informed industry sources suggest that as those container movements come back on line, the container vessel backlog at US ports is likely to increase again, especially when it coincides with the traditional US summer peak season causing increasing delays for Australian meat exporters.

While the latest Food Price Index from the United Nation's FAO, which tracks monthly changes in international food commodities, has fallen by 0.6 per cent in May, the Meat Price Index set a new all-time high climbing by the same amount.

The rise in the Meat Index was led by poultry prices feeling the effects of rising feed costs as a result of the Ukraine conflict as well as the impact of Avian flu across North America and Europe.

US Government data this week showed that chicken consumption in the US is estimated to hit 98 million tonnes in 2022, double the amount consumed in 1999 and ten times the growth rate of beef consumption over the same period.

Closer to home US entries of Australian beef through April are up 8pc on last year but for all countries are up 31pc. Brazil is leading the charge with entries up 280pc over the same period but now being forced to pay the out-of-quota duty of 26.4pc while Ausralia pays zero.

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