November 13, 2013
Pending access of US beef to Russia may threaten Australia
Russia's likelihood to lift restrictions on US beef imports in 2014, upon agreement with the US on import quota for frozen muscle cuts, inevitably impacting Australia's beef trade with Russia.
Russian officials say that they will lift the ban on US beef in 2014, although no date has been confirmed.
Prior to the ban in February, the US exported 80,408 tonnes of beef cuts and variety meats to Russia in 2012. Exports dried up in December due to signals that Russia was going to impose a ban due to a zero tolerance policy for the growth promotant, ractopamine. The ban officially took effect in early February and there's been no significant US beef exports since.
Since May 2012, Australia's beef exports to Russia hit their highest level in October, totalling 4,557 tonnes, more than twice the figure exported this time last year.
The boost in shipments comes as the Russian quota year winds-down and importers seek to fill their quota allocations. The recent ban on some Brazilian plants from the market and the redistribution of the unused 60,000 tonnes of US frozen beef quota has also contribute to increased interest for Australian beef from Russian buyers.
Despite the boost in exports during October, Australian shipments to Russia for the year-to-date remain 22% below 2012 volumes, at 23,456 tonnes. South American beef exports to Russia have risen throughout 2013, with Brazilian exports to Russia up 14% on-year, contributing to a tough competitive environment for Australian beef in the market.
At the same time, Australian beef has been receiving higher prices in alternate markets, meaning product has flowed in higher volumes to these markets at the expense of shipments to Russia, said Ben Larkin, analyst for Meat and Livestock Australia's (MLA) Europe / Russia region. Cheaper South American product has impacted on the price Russian importers have been willing to pay for Australian frozen beef.
Chilled beef exports remain the highlight for Australia's trade into the market, with October shipments up 194% on-year, at 212 tonnes, while 2013's year-to-date volumes are up 153% at 2,210 tonnes when compared to 2012.
Russia re-allocated the unused US beef import quota in late October, freeing-up 60,000 tonnes of US-assigned quota which has been idle since the US was banned from the Russian market in February. Despite the reallocation, the fact that it comes so late in the quota year (operating on a calendar year basis), means that supplying countries, including Australia, will struggle to capitalise on the increased tonnage opportunity.
Australia currently shares access to a 407,000 tonnes frozen beef quota in Russia, while the EU and the US both have country-specific quotas of 60,000 tonnes, respectively.
