Monday, April 22, 2024

Critical negotiations with Korea

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The Cattle Council of Australia (CCA) has been part of a delegation to restart negotiations with Korean authorities on a stalled Australian free-trade agreement (FTA). CCA president Andrew Ogilvie, along with representatives from the National Farmers Federation, Australian Meat Industry Council and Australian Lot Feeders Association, travelled to Korea in March to meet Korean importers and retailers of Australian beef to discuss how the Australia-Korea FTA could be completed.
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Ogilvie says Korea is Australia’s third-largest beef export market, taking close to 150,000 tonnes in 2011. That represents 15% of Australia’s global beef export market worth about $770 million.

The delay in settling the FTA with Korea could mean Australian beef exports to Korea could be halved during the next 15 years. 

Unless the Australian and Korean governments can reach agreement for the FTA to be signed off, Australian beef will become too expensive for Korean consumers.

From January this year the US beef will have a tariff of 34.67% compared with 40% for Australian beef, giving the US a 5.3% price advantage.

While grass-fed beef quality can command a market premium, it is difficult to maintain market share with such a price disadvantage.

Ogilvie says that until the FTA is signed off by both governments, the Australian beef industry could incur a A$13 million loss in export value for this year alone. That’s simply due to the tariff differential between US beef and Australian beef.

If the FTA fails to match that of the US-Korea FTA, Australia’s share of the Korean beef market could halve over the next 15 years. The financial impact is serious money for Australian cattle farmers and beef exporters. It could be as much as A$182 million by 2026. The cumulative losses could reach A$1.4 million over 15 years.

Ogilvie says CCA is lobbying the Federal Government to act urgently to ratify the Korean-Australian FTA so it can be implemented ASAP and Australia can compete on equal trade terms to the US.

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