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Don’t believe the Armageddon hype – the UK beef industry will be fine after Brexit

Farmers are being told Brexit will bring about the end of the UK beef industry, but the doom-mongers are wrong, says Norman Bagley, head of policy at the Association of Independent Meat Suppliers (AIMS).

We are being inundated with Armageddon scenarios post-Brexit for the domestic beef market, some of which border on the delusional, so let’s have a look at what other countries are actually doing and inject some perspective.

 

My first presumption is that we will be trading with the EU on the same basis as we are now as officials and Ministers have indicated.

 

As an eternal optimist, I’m sure they are truthful and know what they’re doing, but if not and we crash out on World Trade Organisation (WTO) terms, the implications for beef are nothing like what they would be for lamb.

 

The pound versus the euro and dollar would crash, giving even more protection to domestic production.

 

Hormone-treated

 

Currently, we are told any Free Trade Agreement (FTA) with the US would involve taking American hormone-treated beef, which Defra Secretary Michael Gove has said he won’t allow.

 

Actually, US farmers are already gearing up for hormone-free beef under NHTC (non-hormone-treated cattle).

 

This is currently paying a premium of approximately £120 per 350kg carcase, indicating that this product would not be a significant price threat to UK producers.

 

More interestingly, there is a row going on in the US about imported ‘grass-fed’ beef undermining domestic production by being labelled as ‘product of USA’.

 

Loophole

 

This is possible because of a loophole which means imports can be branded as US product when they are just processed there, following the dropping of CoOL (Country of Origin Labelling) regulations some time ago.

 

US producers owned about 60 per cent of the domestic grass-fed market in 2014, but it is now down to 15 per cent.

 

The problem is a bit more nuanced, however, as the US is nothing like as efficient as Australia, New Zealand and Canada at grass-fed beef production, which is where the imports are coming from.

 

Grass-fed beef in Australia, for example, has all the bells and whistles – no GM, no grain, you name it – it is pure grass-fed.

 

Interesting

 

Interestingly, as an example, one large Australian beef herd of 500,000 cows only exports 5 per cent of its product to the EU.

 

They cannot be bothered with all the bureaucracy and unnecessary cost involved when there are plenty of other markets out there. A lesson perhaps?

 

So, all in all, the US does not seem too much of a threat in any FTA.

 

The same probably applies to Australia, New Zealand and Canada too, which currently work on a quota basis, which probably would not change, and even if it did, their beef is not cheap.

 

South America

 

South America is interesting as well, because it operates under a quota system to the EU.

 

Why would the UK allow tariff-free unrestricted imports, especially with Brazil still on the naughty step in hygiene terms and Uruguay not at the cheap end either.

 

The assumption is that we will get a proportion of the Hilton quota, which puts a ceiling on beef coming into the EU.

 

I suppose the key question for UK producers in terms of imports is: Would the retailers switch to a cheaper imported alternative if domestic supplies dropped post-Brexit?

 

Well, they had a chance when the pound was 1.42 to the euro. Imports were cheap then, but after being caught out with the horsegate scandal they committed themselves to a more expensive UK product rather than take a risk.

 

Provenance

 

Provenance won the day hands down, but of course retailers could reverse that decision if they fancied an opportunity.

 

The big issue in domestic production terms, especially in England, is whether post-Common Agricultural Policy (CAP) support will be enough to keep suckler producers in business, or will they have to depend solely on the end price alone?

 

Either way, relatively high priced UK domestic beef looks set to be the norm whatever is thrown at it.

 

Then again, I could be wrong.

 

Norman can be found tweeting at @normanbagley1


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