Exports may still be below pre-BSE levels but British beef is back on the global scene, with a resurgent reputation. How will this affect UK supply, asks Nick Hughes
The pariah of the international meat trade for so long, British beef is leaving the BSE crisis behind and winning back a place at top tables globally.
Exports of fresh and frozen British beef reached an estimated 134,000 tonnes in 2010, according to the Agriculture and Horticulture Development Board, up 27% on 2009. This may pale in comparison to the 250,000 tonnes or so that UK beef producers used to export before 1996, but it nevertheless represents remarkable progress for an industry that had, in effect, been excluded from the international market for more than a decade.
“We’re still exporting two and a half times less than in 1995 but we’ve made good progress,” says Peter Hardwick at Eblex, one of the industry bodies that have worked hard to restore the worldwide reputation of British beef since the export ban was lifted in 2006.
So which countries are driving this export renaissance, and what impact will increased beef exports have on the domestic beef market and retail prices?
The most important market for British beef by far is Europe: 97% of all beef exported by the UK remains in the EU. Last year, for example, the Netherlands alone accounted for 36% of British exports or 40,000 tonnes while exports to the Republic of Ireland increased 10% to 27,500. There were also increased shipments to Germany, Denmark and Poland in 2010, all of which bought about 2,000 tonnes more British beef than in 2009.
But industry bodies are keen for British producers to develop markets beyond their immediate EU neighbours. That isn’t always easy, admits Hardwick, as bilateral negotiations with non-EU countries can often be a “slow and complicated process”.
Having said that, the UK has recently benefited in its negotiations from a general increase in demand for animal protein around the world at a time when supply is relatively tight.
Turkey, for example, has had difficulties producing enough beef for its domestic market and has reduced its historically high import tariffs to attract more beef from abroad and stave off a shortage. Its home-grown beef is now supplemented by imports from the UK, among others.
The UK has also achieved good access to most central and west African markets, and just regained access to South Africa. Recently, trade representatives from the UAE visited the UK with a view to approving UK beef imports after granting access to UK sheepmeat.
This represents a remarkable turnaround in how British beef is perceived globally, says Hardwick. “In 2006 and 2007, we might have had four or five non-EU markets prepared to source beef from the UK,” he says. “That number’s now about 30 and increasing all the time.”
As well as exporting standard cuts to these new markets, British beef producers are finding many export countries can be good for ‘fifth-quarter’ products such as feet, tripe, hearts and liver cuts for which there is very little demand in the UK. A few years ago, the fifth quarter was largely an extra cost burden on producers, who had to dispose of large parts of their animals.
“There are countries where there is huge demand for the fifth quarter,” says NFU chief livestock adviser John Mercer. “Today, the fifth quarter returns more than £100 per animal to the operator. That is a massive turnaround in value, with the potential for it to increase.”
Despite these successes, it would be naïve to suggest the spectre of BSE does not still haunt the British beef industry. When British producers first started selling on the international market again, there were considerable reputational challenges to overcome some of which persist today, says Hardwick.
The UK has had little joy getting any movement from the US on meat exports meat from ruminant animals, and Canada still doesn’t allow imports either.
There are challenges closer to home, too. British beef is beginning to get good traction in foodservice and food manufacturing on the Continent, where country-of-origin labelling is often less prominent and quality rather than origin drives purchasing. But to see British beef being sold as ‘British beef’ in, say, a German supermarket? That’s still some way off, says Hardwick.
“Are we selling British beef into European markets? Most definitely, yes. But is British beef being sold blatantly as British in major retailers on the Continent? Only to a very limited degree.”
Hardwick is optimistic, however, that over time attitudes will continue to change. Eblex is forecasting British beef exports to reach 206,000 tonnes in 2011, meaning nearly 100,000 tonnes more beef would leave the country than in 2010.
So what might this mean for UK supply? It’s easy to assume that, with more British beef going to other countries, supply in the UK could tighten and consumers could end up paying more for their Sunday roast. But the situation is not that straightforward, argues Hardwick. UK beef prices aren’t determined in isolation, he cautions, and if prices were to go up they would do so because “there’s a global market for beef that is showing signs of being short.”
Mercer at the NFU is less cautious. The economics of producing beef are such that farmers will inevitably look to exploit any opportunity for better returns, he says. “Recently, input prices have increased significantly, and there needs to be an extra dynamic in the market,” he says. “We’re very proud of the quality of British beef, and need to get a better price for it.”
It’s an unsurprising sentiment given the impact of promotions on the beef category. In the wake of the recession, sales have been holding up, with total UK beef sales up 0.3% in volume and 0.8% in value in the 52 weeks to 20 March, according to Kantar.
But beef category analyst Will Duff says that much of the solid performance over the past year has been down to volume-based price promotions. For example, 34% of volume sales of beef mince have been on promotion in 2011 compared with 26% in 2010. And he warns: “While promotional dynamics have encouraged shoppers to buy more, the question is whether volume-based mechanics such as this are sustainable.”
For if aggressive promotions mean producers are unlikely to get the return they want selling into the UK, export markets could represent an attractive alternative revenue stream. Eblex is already planning to use an increase in its levy rates from £3.50 to £5.40 per cattle to ramp up its export activities and promote the benefits of red meat in the UK and abroad.
The hope is that although the UK will remain the premier outlet for UK-produced beef, export markets will ensure producers can always find a way of selling their beef at a profit. “Exports aren’t an end in themselves,” says Hardwick. “They’re a means to an end, which is to maximise profitability across the sector.”
Should such profitability elude beef producers in this country in the future, the growing esteem with which British beef is held abroad could mean a UK-produced roast could come at an increasing premium.
South American danger Ongoing discussions between the EU and the Mercosur countries to reduce trade barriers have put the EU beef industry on edge. European farming organisation Copa claims EU beef farmers stand to lose as much as 25bn if Mercosur countries gain greater access to EU markets, with the NFU claiming a new tariff deal would be detrimental to UK producers.
Beef imports from South America to the UK were actually down last year, with 42% less from Uruguay, 36% less from Brazil and 81% less from Argentina amid falls in their beef production. But John Mercer at the NFU says Mercosur countries will look for access to the EU once tariffs are cut. And he claims South American beef is inferior in terms of environmental standards, traceability and welfare.
Such accusations are rejected by those who believe UK consumers could benefit from greater volumes of cheaper South American beef. Shoppers should be presented with the full facts on where and to what standards beef is produced instead of being scared off with claims of dubious quality, says Liz Murphy, director of the International Meat Trade Association.
“We’ve got no objection to the British saying ‘this is how we produce our product’, but then equally the importing country should have the opportunity to explain how they produce.” Eblex’s Peter Hardwick has fears for the UK’s long-term food security if British farmers are driven out of business by imports. Murphy, however, says a resilient market requires a multitude of food sources.
“If you put up a whole load of barriers, your domestic industry can get weaker because there isn’t that kind of competitive edge,” she says. “And we in the UK want to export. We can’t make it a one-way situation.”
Read the full Meat & Fish Supplement 2011