Australia's beef quota access into the European Union, Australia's highest value per unit beef export market, has continued to fall over the last eight years because of two main reasons, Brexit and United States trade policy.
That fall will continue over coming years unless there is a positive outcome through the free trade agreement negotiations with the EU underway at present.
Before Brexit in 2020, Australia had a 7150 tonne High Quality Beef, or HQB, quota into the EU under the World Trade Organisation at 20 per cent duty.
When the United Kingdom left the EU, that EU quota was split in two - 3761t was given to the UK, leaving the remainder, less than half of the original quota or 3389t, for Australian beef access into the EU.
Since the new UK import quotas under the free trade agreement came into force on June 1, the 3761t of EU quota the UK took with them after Brexit has now become commercially unusable. That's because the 20pc duty still applies against the zero tariff on the new UK quotas.
It will now likely sit idle and largely unused - lost access to the EU because of Brexit that would now be very useful.
The EU grainfed quota
Australia over the last decade has also been benefitting from the EU Grainfed Beef quota of 45,000t established in 2010 between the US and the EU.
That quota has been open to five or six countries but until 2018, Australia and Uruguay were the most successful suppliers against the quota.
In 2014, Australia shipped 24,524t of beef to the EU, 23,335 tonnes of that was chilled mainly grainfed, proving there was a market there for Australian beef if we had the access.
In 2019, the US gained agreement for an increasing proportion of that EU Grainfed Beef quota to be set aside for US exporters only, with a decreasing amount available for the other suppliers like Australia.
The new EU Grainfed Beef quota year began on July 1 and for 2023/24, only 17,200t of the 45,000t quota is now available for Australia to compete for against Uruguay and Argentina.
Australia shipped only 7069t to the EU in 2022, a 70pc reduction on the peak levels of 2014.
That 17,200t "other country" grainfed access will continue to fall to just 10,000t by 2026, so combined with the affects of Brexit, our beef exports to the EU will likely continue to fall over the next few years.
The one opportunity to rectify this declining access is the free trade agreement negotiations with the EU.
New UK access
It's now been over two months since the UK market opened up its zero tariff access for Australian beef after 40 years of EU quotas. Despite all the hoopla around the new access, as at July 28 only 100.5t of the 10,308t of access available for new entrants has actually been used. This is far less than some pundits forecast but all exporters report the market as slow with food inflation at around 17pc generating caution by all players.
Even at the manufacturing beef level, now open for the first time to Australian grinding beef, many further processors and grinders in the UK have been used to fresh trimmings from EU suppliers like Poland and are not set up for frozen trimmings from Australia as a US grinder would be.
There have been a couple of well publicised deliveries of top end product and certainly over 589t of the new quota has been allocated to the half dozen traditional exporters to the UK since June 1.
That is almost double the small volume shipped in the first four months of the year.
The National Farmers Union in the UK however has expressed real concerns for the local beef market where they say that over 29 pound per kilogram has come off Irish and UK 'clean steer' prices over the last eight weeks.
That is just bad timing, as one Australian exporter put it, for the new access to become available, but the potential is there and will eventually emerge.
Import meat inspection in the US
The Meat Importers Council of America has filed a petition in the US regarding the US Government policy of restricting import meat inspection establishments, known as I Houses, to those facilities within 50 miles of US ocean or land port of entry.
In this era of port congestion and supply chain disruptions the rule restricts the inspection of imported Australian meat. A change to the arbitrary rule would benefit the Australian beef and sheepmeat export sector offering more flexibility to US supply chains and would widen access to cold storage space.
With modern traceability systems used by the Australian meat industry, tracking product once it has entered the US should no longer be an issue.
Cattle prices
Closer to home market analyst Aginfo says that Australian cattle prices expressed in US cents carcase weight have fallen into a band around US$3/kg with South American prices which helps processor competitiveness in a global market under price pressure.
From a global perspective, US cattle prices have risen to be a clear outlier, Aginfo says.
Cattle slaughter in Australia was around 121,000 head last week with an upward trend in female slaughter. US values for imported frozen 90s are up slightly with a weaker Australian dollar but there is still a large 40-45 USc/lb gap between frozen Australian and US fresh domestic 90s.
