Wednesday, May 22, 2024

Opportunities abound in US beef market

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Prime cuts, certified Angus beef fetching good prices says BLNZ.
Beef + Lamb NZ senior manager for international trade Frances Duignan has recently returned from trade meetings in the United States, United Kingdom and European Union.
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New Zealand is well placed to capitalise on opportunities in the United States beef (mīti kau) market, according to Beef + Lamb NZ senior manager for international trade Frances Duignan.

Duignan recently returned from visits to the US, United Kingdom and European Union,.

With imports needed to meet demand as US cattle numbers fall to their lowest since 2015 and further decreases expected in 2023, there is an opportunity for NZ beef products. 

“It’s expected prices will remain elevated throughout the US market for better beef products such as prime cuts, certified Angus beef and other high-end products,” Duignan said.

“US producers recognise the crucial role imported beef needs to play to retain its place in the market. 

“Imports only make up 12% of US beef consumption so there is a significant opportunity for NZ beef products both in terms of quantity and quality over the next few years,” Duignan said.

Despite tighter supply the US beef sector remains committed to building its global exports, increasing by 20% in the past two years. 

Exports have been driven by demand from Japan, South Korea, and China. 

The US sheep sector does not share the same ambitions around exports.

The cumulative challenges facing domestic supply and the US sector’s nominal political capital mean pursuing trade restrictions on lamb imports has been deprioritised.

Instead, the sector’s advocacy efforts are focused on maintaining current subsides and securing additional support measures. 

Meantime US trade restrictions on lamb imports are unlikely as the US sheep industry continues to demonstrate increased protectionist sentiments. 

Duignan said this US view has been fuelled over the past few years by the significant increase, 28% from 2021-2022, in US global sheep imports to meet domestic demand and the recent entry of the UK and Ireland into the US market. 

As part of her travels Duignan attended the American Sheep Industry Convention in Fort Worth Texas and the National Cattlemen’s Beef Association’s (NCBA) Annual CattleCon in New Orleans. 

She also met with a range of stakeholders in London and Brussels. 

Duignan said with free trade agreement (FTA) conversations largely over in the public arena, NZ is well placed to work with industry counterparts that across the UK and EU are struggling with the onslaught of regulations “and quasi-governmental regulations” related to sustainability.

“In many respects, the influence of traditional agricultural leaders has been usurped by longtime anti-meat advocates leaving science-based decision-making to one side. 

“This was something NCBA also noted during their recent mission to Brussels. 

“Given our work in this space, supported by strong science and robust evidence, NZ is well placed to work with industry counterparts on shared challenges and opportunities in-market.” 

The NZ-UK FTA should enter into force in a few months.

“NZ has successfully established a good reputation with MPs and other key stakeholders for our sustainability credentials and world-leading animal welfare practices, which has resulted in more support for the NZ FTA.

With the market access outcomes of the Australia-UK FTA, NZ will soon have competition in the UK. 

Australia currently has a 13,300t quota. Under the FTA, Australia will get immediate access to a duty-free quota of 25,000t increasing, in equal instalments, to 125,000t in Year 15 before full tariff liberalisation.

Australia’s meat industry is focusing its efforts on making the most of this new access, with inventories for Australian lamb already impacting the UK lamb market.

The NZ-EU FTA should enter into force in late 2023, early 2024, and Duignan said it is highly unlikely there will be any delays in it being ratified and implemented as the level of support throughout Brussels “is astonishing”.

Any delay, she said, would come at the NZ end due to the timing of the General Election.

Meanwhile it has been a subdued start to the year for NZ red meat exports, with total export values down 7% compared to January 2022, according to analysis by the Meat Industry Association. 

Overall, red meat exports for the month were worth $858 million with a drop in export values to most major markets including China ($344m), down 10% followed by the US ($177m), down 6%, Japan ($31m), down 22%, and the UK ($30m), down 26%. Despite the drop in overall value, the total volumes of red meat exports to all countries increased compared to January 2022.

For sheepmeat, a total of 36,496t was exported globally, an increase of 18% by volume but a drop in value of 5% to $343m.

The volume of beef exports was unchanged at 42,124t, but there was a drop in value of 11% to $358m.

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