Beef farmers in Brazil and Argentina are poised to benefit from the UK Government’s no-deal Brexit tariffs, according to AHDB.
At the moment, South American producers are priced out of the EU market by tariffs, but in a no-deal scenario, the UK would open up a tariff-free quota of 230,000 tonnes to all countries with a licence to export to the UK.
This first-come-first-served quota could see Irish beef farmers – who supply the bulk of UK beef imports – in direct competition with their counterparts in Brazil and Argentina for the first time.
AHDB’s red meat analyst, Tom Forshaw, said: “South American countries have significantly lower cost of production than the UK and Ireland.
“As such, their beef could be an attractive option for importers, especially those supplying the food service sector where provenance is not always prioritised as highly as it is in the retail sector.
“Further to this, we estimate shipping costs across the Atlantic to be around 20 eurocents/kg, which would keep the price competitive.
“In a scenario where South American companies are able to build relationships with UK suppliers to take advantage of the tariff-free access, this could affect both the Irish export price and the UK domestic price.”
Mr Forshaw also suggested there may be scope for Brazil to cut prices even further in a no-deal scenario.
“Looking at the price of frozen boneless cuts delivered in 2018, the Brazilian price delivered into the UK was similar to the Irish price,” he said.
“These products constitute the vast majority of Brazilian exports.
“It is possible Brazil is deliberately pricing just below Irish beef in order to maximise the returns on its current guaranteed volume quota.
“In a no-deal scenario, when Brazil could be competing directly with Irish beef for the tariff-free quota, and considering the lower cost of production in Brazil, it is feasible to suggest Brazilian exporters have room to further reduce their price.”
AHDB has developed a range of reports and resources to help levy payers prepare for Brexit. They can be accessed HERE.