October 11, 2010

 

Australia targets EU grainfed beef market

The Australian beef industry should not be disillusioned by slow progress in penetrating the promising new tariff-free EU grainfed beef market, but instead see the trade as work in progress with longer-term benefits.

 

Since Australia joined the US in February as the only other eligible supplier to the EU grainfed trade, only about 743 tonnes of Australian beef had entered the market - about 5% of the available 14,000-tonne quota access since February.

 

Significantly, however, the US had also fallen well short of filling the EU grainfed opportunity this year, leaving most of the quota access unexploited.

 

According to Meat and Livestock Australia (MLA)'s Europe manager Jason Strong, a lot more beef producers would need to gain EU accreditation to drive the supply of eligible feeder cattle. Currently there are only about 300 active EU-accredited cattle suppliers in Queensland, out of a total producer population in the tens of thousands.

 

After a slow start, volumes out of Australia were now increasing, and Strong hoped that the first full quota year (July 2010 to June 2011) would deliver somewhere between 5,000 and 7,000 tonnes.

 

Beyond simple volume of supply however, the most important challenge for Australia was in meeting EU customer expectations over consistency and quality.

 

Part of that was about better educating customers about the range of beef Australia could produce, and how to order it.

 

Strong suggested the main early opportunities in the grainfed EU trade would continue to be in the upper-end of food service and catering segments. Working on ways to maximise some of the non-traditional loin cuts for use in further processing would also be useful.

 

Part of the challenge in this was in Australia's history as a grassfed EU supplier, meaning there was an underlying perception in some circles that Australian beef generally might be lower quality than US supply.

 

"Relationships between suppliers and customers will also be the key for us, going forward," Strong said.

 

Australia was already seen very favourably in Europe for its food safety, traceability and animal health status.

 

Responding recently to questions about the level of premium required to induce more producers to adopt EU accreditation, Teys corporate affairs general manager Tom Maguire said there would be some times when EU premiums were more attractive than others. But market access was the key, in order to maximise returns.

 

In essence, the new EU grainfed quota differs greatly from others that Australian exporters have worked under previously.

 

Firstly, it is importer, rather than exporter driven.

 

Importers applied for a share of the quota each month, and the 20,000-tonne annual entitlement is split into 12 equal monthly allocations, each of about 1660 tonnes.

 

One of the biggest attractions is that the EU grainfed trade does not attract the 20% import tariff that applies to Australia's 7000-tonne grassfed EU quota.