'Irish beef may potentially have to compete directly with South American beef' - analyst

Ciaran Moran

Ciaran Moran

Irish beef may potentially have to compete directly with South American beef in the valuable UK food service market, in the case of a no-deal Brexit.

It might be one of the many implications the UK government's proposed no-deal tariff regime might have on beef imports, according to Tom Forshaw, Red Meat analyst with the UK's Agriculture and Horticulture Development Board (AHDB). 

Under the proposals there would be a tariff-free quota of 230,000t, open to all countries with a licence to export the UK, on a first come first served basis. 

UK consumers currently consume around 1.2m tonnes (carcase weight equivalent) of beef (production plus imports, minus exports). 

Forshaw says this makes the UK around 80pc self-sufficient in beef and so currently it relies on imports to meet its demand. 

In 2018, he said 73pc of UK beef imports came from Ireland, with the vast majority of the rest being from other EU countries, with free access to the UK market.

However, in a no deal scenario, countries like Brazil and Argentina will have equal access into the UK beef market. 

"Until now they were priced out by the EU external tariff policy, making their beef uncompetitive. 

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"However, South American countries have a 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," he said.

In his analysis of the British tariff proposals, Forshaw that under the current EU tariff regime for frozen boneless beef the Irish price in the UK with no tariff is €4.25/kg while the current Brazillian price in EU with EU tariff - €8.97.

The current Brazillian price for frozen boneless beef is €3.91/kg.

Under the planned UK no-deal tariffs Forshaw says the Irish price in the UK with new UK tariff would rise to €6.14, while the Brazillian price in the UK with new UK tariff would fall to €5.78. This would leave Brazillian beef with a 36c/kg price advantage over Irish beef.

Forshaw estimated that shipping costs across the Atlantic would be around 20c/kg which would keep the price competitive. 

"In a scenario where South American companies are able to build relationships with UK supplies to take advantage of the tariff-free access, this could affect both the Irish export price and the UK domestic price," he said.

He highlighted that the price of frozen boneless cuts delivered in 2018, the Brazilian price delivered into the UK was similar to the Irish price. 

"These products constitute the vast majority of Brazilian exports. 

"It is possible that 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 that Brazilian exporters have room to further reduce their price.

"As such, while the 230,000 quota will limit the exposure of the UK domestic price to South American beef, Irish beef may potentially have to compete directly with South American beef," he said.

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