B+LNZ’s Senior Manager for International Trade, Frances Duignan, recently visited parts of the United States, United Kingdom, and European Union to meet with key stakeholders.
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.
Below are some insights gathered from conversations with key stakeholders.
United States (US)
US trade restrictions on lamb imports unlikely
The US sheep industry continues to demonstrate increased protectionist sentiments. These views have been fuelled over the past few years by the significant increase in their global sheep imports (28 percent increase from 2021 to 2022) to meet domestic demand and the recent entry of the UK and Ireland into the US market. However, with the cumulative challenges facing domestic supply and the US sector’s nominal political capital, 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.
Significant opportunities in the US beef market with imports needed to meet demand
US cattle numbers are the lowest they have been since 2015 and it is expected there will be further decreases in 2023 as the drought continues in cattle-producing parts of the US. 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. US producers recognise the crucial role imported beef needs to play to retain its place in the market. Imports only make up 12 percent of US beef consumption so there is a significant opportunity for New Zealand beef products both in terms of quantity and quality over the next few years.
Despite tighter supply, the US beef sector remains committed to building up its global exports
The US beef sector is exporting more than ever, increasing by over 20 percent in the last 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.
NCBA continues to call for the suspension of Brazilian beef imports
Beef imports from Brazil to the US increased significantly over the last few years (92 percent increase from 2021 to 2022). In their latest request to Secretary of Agriculture Tom Vilsack, NCBA cited suspension on the ground of Brazil’s repeated failure to adhere to international animal health and food safety standards including reporting recent Bovine Spongiform Encephalopathy (BSE) cases in a timely manner. Brazil’s global beef exports increased by 27 percent from 2021 to 2022. Representatives of the Brazilian beef industry told stakeholders in Brussels, including Copa Cogeca, the sector was on track to increase beef production by 40 percent by 2040. China has absorbed most of the upsurge to date with beef exports from Brazil to China increasing by 71 percent from 2021 to 2022.
United Kingdom (UK) and European Union (EU)
With FTA conversation largely over in the public arena, New Zealand is well placed to work with industry counterparts
Industry counterparts across the UK and EU are struggling with the onslaught of regulations (and quasi-governmental regulations) related to sustainability e.g. the EU is looking to progress six different regulations on sustainability labelling over the next year. In many respects, the influence of traditional agricultural leaders have been usurped by long time anti-meat advocates leaving science-based decision-making to one side. This was also something NCBA also noted during their recent mission to Brussels. Given our work in this space, supported by strong science and robust evidence, New Zealand is well placed to work with industry counterparts on shared challenges and opportunities in-market.
The New Zealand-UK Free Trade Agreement (FTA) should enter into force in a few months New Zealand 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 New Zealand FTA. There is still considerable negativity surrounding the UK’s FTA with Australia over these two issues.
Australian and NZ will soon compete in UK for sheepmeat market share
With the market access outcomes of the Australia-UK FTA, New Zealand will soon have competition in the UK. Australia currently has a 13,300-tonne quota. Under the FTA, Australia will get immediate access to a duty-free quota of 25,000 tonnes increasing, in equal instalments, to 125,000 tonnes in Year 15 before full tariff liberalisation. Australia’s meat industry is focusing its efforts to make the most out of this new access with inventories for Australian lamb (in preparation for entry into force of the FTA) already impacting the UK lamb market.
New Zealand-EU FTA should enter into force in late 2023/early 2024
It is highly unlikely there will be any delays in the NZ-EU FTA being ratified and implemented as the level of support throughout Brussels is astonishing. For example, the Eurogroup for Animals has decided to publicly support of the FTA, including the exclusion of feedlots in the market access chapter, as one of their top five achievements of 2022. Any delay would come at the New Zealand end due to the timing of our General Election.
EU progressing negotiations with Australia and Mercosur at pace
Driven by the Swedish presidency, the EU is looking to make significant progress/conclude FTA negotiations with Australia and Mercosur (Argentina, Brazil, Paraguay, and Uruguay) by July. While the EU will be following the New Zealand FTA blueprint for Australia, they aren’t reopening up Mercosur negotiations. Instead, negotiators are looking to develop a protocol covering all things sustainability. There is suspicion around the protocol, including whether there will be binding elements. Regardless of its design, it will need to hit a high bar to get through the European Parliament and is unlikely to do so before the 2024 MEP elections in May.