July 17, 2006

 

Australia eyes Russia after EU beef import quota changes

 

 

Australian beef exporters could be beneficiaries of a Russian and EU agreement to reallocate an EU beef quota to other countries, Meat & Livestock Australia (MLA) said Monday (Jul 17).

Under the agreement, Russia would switch 233,000 tonnes of an EU beef quota of 343,000 tonnes to other countries, as the EU is currently a net importer of beef and would not be able to fulfill its quota to Russia this year.

 

Andrew McCallum, manager of market access and trade policy at MLA said import quotas are held by Russian importers, who decide where to source the product.

 

But the decision on the EU quota potentially opens Russia to more exports from Australia, "provided our prices are competitive with South America," McCallum said.

 

"No doubt they'll be looking at price on that," he said in an interview.

 

Russia has emerged as a strong second-tier beef export market for Australia this year.

 

Australian beef exports to the Commonwealth of Independent States in the first half of the year jumped to 5,186 tonnes from 168 tonnes in the year-earlier period, according to official data.

 

The jump in exports from Australia partly reflects a partial Russian ban on beef imports from Brazil, its major beef supplier.

 

Trade was disrupted after the discovery of foot and mouth disease in some cattle in some Brazilian states late last year.

 

This compounded the impact of a self-imposed 10-week total ban on beef exports by Argentina, which was only partially lifted late May.

 

Argentine exports still are limited to 40 percent of what they shipped in the six months ended Nov 30, 2005.

 

Russian veterinary officials are currently in Brazil examining conditions in the states from which Russia banned beef imports.

 

The constraints on South American exports, plus the inability of the EU to supply its full quota, has resulted in beef prices on the Russian domestic market rising by up to 40 percent since the beginning of the year.

 

McCallum said Brazil is the only major exporting country and South America is the only area likely to be able to make serious inroads into meeting expanded Russian needs.

 

"In terms of supplying the volume, we probably are not in the best position to do that given strong demand," from existing major markets of Japan, the US and South Korea, which now take about 90 percent of Australian beef exports, he said.

 

The Russian/EU move frees a previously restricted quota up to more global competition, which has to be positive for Australian exporters, he said.

 

Australian beef, much of which is manufacturing grade product, has been competing on price in Russia this year, depending on market niche and cut, McCallum said.

 

There are also some market openings for high quality grain-fed and grass-fed product, he said.

 

MLA's role is assessing business development opportunities and coordinating visits by exporters including participation in trade shows, with one scheduled for February in which nine exporters have indicated interest in participating, he said.

 

Australia is the world's second-biggest beef exporter, after Brazil, with the annual volume of exports exceeding A$4 billion (US$3 billion).