A complication in the UK FTA for red meat: Over the Hooks with Steve Martyn

The two new quota schemes (beef and sheepmeat) developed in consultation with industry have already kicked into play. This occurred once the Department of Agriculture, who will manage the quotas, were advised of the starting date.

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Both quotas have had to be pro-rated reflecting the scheme is beginning in the middle of the quota year. That means that Year One access (2023) for beef under the scheme of 35,000 tonnes has been pro-rated back to 20,616 tonnes for the remainder of 2023.

For Sheepmeat the 25,000 tonnes of Year One access falls back to 14,726 tonnes.

Quota has already been allocated to those exporters eligible to receive it. The Department is already processing requests from exporters with product on the water to the UK under other quotas that will arrive in the UK on or after June 1, allowing transfer across to enter under the new arrangements.

But there is a last-minute complication that will take the shine off an otherwise very good outcome for the Australian meat export sector. That complication revolves around the status of Northern Ireland. The issue is that Australian product imported under the two new UK meat quotas will at present not be able to be imported directly into Northern Ireland but will have to be processed outside the country first.

The United Kingdom comprises England, Scotland, Wales and Northern Ireland and the A-UK FTA was negotiated with the expectation that it would cover all four countries. While Northen Ireland is part of the UK, the Republic of Ireland remains part of the EU. While the Republic of Ireland and the UK were part of the EU, they all operated under the same trading arrangements. Now that the UK, including Northern Ireland, has left the EU following Brexit, Northern Ireland has had to tread a more sensitive line.

The Good Friday Agreement in 1999 saw the end to the civil unrest in Northern Ireland and included an open border between the country and the Republic of Ireland. To avoid breaking the Good Friday Agreement, since Brexit, Northern Ireland has had special status given it remains a participant in the EU single market with the Republic of Ireland but also remains a member of the UK that has left the same market.

The Windsor Framework, agreed on February 27 this year between the UK Government and the EU, sets out the future trading arrangements for Great Britain (England, Scotland and Wales) and Northern Ireland. The outcome of that agreement however is that Australian meat products will not be able to be be imported directly into NI using either of the two new UK quotas.

Northern Ireland has not been a major part of our meat trade to the UK in the past but there are some very important long-term trading relationships there and this stumbling block is disappointing given all the positives of the free trade agreement itself.

Pre-FTA access for beef to Northern Ireland was at 20 per cent tariff with tight specifications so the zero tariff under the new quotas and no specification requirements offers new potential.

The UK and the EU authorities are working on finding a solution to the issue and UK importers and Northern Ireland end users have been very vocal in encouraging that outcome. At time of writing that solution had not been found.

The new FTA was intended to cover all of the UK but at present that's not quite the case.

Despite the welcome and positive developments in the China/Australia relationship over the past 12 months, removing the current suspensions on meat processing plants into China will be a slow and gradual process. That also appears true for the granting of Chinese listing for up to another dozen plants that have never been given that opportunity despite meeting all the requirements.

While the meat industry still awaits a significant change to the existing situation, there has been positive, incremental progress for Australian meat establishments undergoing required registration updates and renewals processes through CIFER (The China Import Food Enterprise Registration) system. This includes a number of registration extension applications being approved in CIFER, and improvements in the system that will remove previously experienced registration application, renewal or extension sequencing issues. While small, these actions improve the ability for listed establishments to maintain their registration and access, and will help when it comes to overturning suspensions or seeking new listings.

Decree 248 in China requires any establishment involved in the Chinese meat import supply chain (whether you are suspended or not) to be registered in the CIFER system. In China the responsibility for CIFER registration sits with the Australian establishment which must complete the process as a country requirement for the market. You cannot be part of the supply chain to China unless you are registered on CIFER.

DAFF have a special CIFER team that are assisting exporters in this process.

There has been continued elevated slaughter levels in Australia across sheep, lambs and cattle with MLA reporting the highest combined eastern states slaughter since 2002 of 642,500.

Cattle slaughter in the last week increased to 119,551 head and some processors are reporting they are booked out for some months. Subject to labour and other factors market analyst Aginfo suggests there is a general impetus for a level of slaughter not seen since early 2020.

While the Australian dollar has been weaker, the US beef complex has also eased in the run up to the Memorial Day holiday but with US commercial red meat production down 8pc over April and beef production down 11pc over the same period, most forecasts remain bullish over the medium term.