Friday, February 23, 2024

Beef with EU frustrates exporters

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Regs intended to rein in Brazilian deforestation could make sales into bloc a nightmare for NZ.
NZX Agri. Country-Wide Magazine. Mike McCreary and Liz Casey and their Silver Fern Farms sheep and beef property, Kumenga Farm, South Wairarapa. R2 bulls.
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Frustration is mounting among beef exporters after months of being kept in the dark by the European Union over potentially trade-stopping supply chain regulations.

Under EU deforestation regulations passed last June, any entity anywhere in the world selling beef to the bloc’s 27 member countries must show proof that its products have not contributed to deforestation since the end of 2020. The deadline for compliance is the end of this year.

Exporters will also need to prove their products were produced in compliance with the laws of the exporting country or risk fines equal to 5% of their global turnover. 

Included in the EU’s global dragnet are exporters of soy, palm oil, cocoa, coffee, rubber and wood. 

Lamb had been in its crosshairs too but the United Kingdom and New Zealand, as the two largest exporters of sheepmeat to the EU, successfully argued against its inclusion. 

Exporters, under the worst-case scenario, could have to supply so-called geo-location data for every single piece of beef entering the EU. 

This data would be matched up with a global reference map of forest cover compiled by the EU to prove it is not a product of deforested land.

Beef +Lamb NZ (BLNZ) trade policy adviser Nick Jolly said the data requirements could be enormous under such a scenario.

“If you think of a 20 tonne container, there are quite a lot of bits of animals in there, which add up quite quickly … if you have to provide coordinates for the whole of the animal’s life,” Jolly said.

High tariffs meant the $94 million of beef exported to the EU in 2022 was relatively small relative to NZ’s global beef exports of $4.6 billion in 2022/23. 

However, the trade is high value and exporters frequently pay the high out-of-quota tariff to supply high-paying European customers. 

Beef exporter ANZCO’s general manager sales and marketing, Rick Walker, said NZ’s beef trade to Europe is due to receive a boost later this year with the commencement of the NZ-EU free trade agreement.

Under the agreement, NZ’s high-value beef quota rises from 846t per annum currently to 10,000t  within seven years. 

Walker said the deforestation regulations in their current form have the potential to stop NZ’s beef trade with the EU in its tracks. 

“Based on the systems we have in the industry at the moment, it would be very, very difficult to deliver what they are asking us to deliver if not completely impossible.

“If you look at this at face value, this is a potentially significant issue for our market access into Europe.”

BLNZ’s Jolly said it is particularly frustrating when NZ is not the intended target of the regulations.  

He said the real target is Brazil, which, as a large contributor to global deforestation, is perversely in a better position to comply with the new regulations.

“If you look at the Brazilian beef that is going to the EU, it is certified and meets these requirements … but it does place quite a big imposition on countries like NZ, who do not have systems set up for deforestation because it is not an issue here.

“If anything we are struggling with afforestation.”

Jolly said NZ is one of a number of countries pushing to be classified as a low risk to global deforestation. 

It is hoped checks on beef shipments from countries deemed low-risk countries will be less frequent.

Due diligence requirements for importers could also be less onerous. 

Jolly said exporters are still waiting for these details after being first promised them by the EU by the end of 2023. 

He said that had been replaced with an early 2024 deadline for more information, though a spokesperson for the EU in Wellington was unable to confirm that to Farmers Weekly. 

ANZCO’s Walker said time is running out for exporters, with the December 31 deadline for compliance looming.

“That is why we are pushing Beef + Lamb and the Meat Industry Association and MFAT [the Ministry of Foreign Affairs and Trade] to engage with our embassies in Europe and with the European Commission to discuss what this means for NZ.

“How are they going to classify us and what can we do to start preparing for it, because it is really hard at the moment for us to do anything.”

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