Australia’s biggest beef exporter said it planned to ramp up sales to the UK if the two countries strike a zero-tariff, zero quota trade deal, predicting that Australian beef exports to the UK could rise as much as tenfold in the event of an agreement.
As Boris Johnson prepared to meet senior cabinet ministers to thrash out bitter differences over the controversial deal, the Australian Agricultural Company (AACo) said a UK-Australia trade deal would provide big opportunities for it and other producers to expand beef sales in Britain.
“In the event of a free trade deal that removes tariffs and quotas we could see [Australian beef] exports double or triple,” said Hugh Killen, AACo chief executive. “In fact, given exports are so small now it’s possible they could even increase tenfold.”
The National Farmers’ Union has warned that a zero-tariff, zero quota deal risks throwing British farmers “under the bus”.
Scott Walker, the chief executive of NFU Scotland, told the Financial Times that reports of Australian producers licking their lips over the prospect of tariff-free access to UK markets “reinforces our concerns” about the planned deal.
The UK only imports 1,567 tonnes of beef from Australia every year, 0.5 per cent of total imports, but Walker said that a tenfold increase could have a significant impact on high-end Scottish beef farmers who farmed small herds rather than operate massive Australian-style feed lots.
“What you have here in the UK is a finely balanced market, so it doesn’t take that much coming into the market to knock it off balance and impact prices,” he said.
“This reinforces our concerns with this trade deal that what we’re going to see is a flood of extra product coming into this market that doesn’t have the same production system as in the UK. We are not competing like-for-like.”
Australian negotiators are adamant the UK must provide ‘zero-tariff, zero quota’ access to British markets in order to close a trade deal that Liz Truss, the international trade secretary, said both sides were in a “sprint” to conclude ahead of the G7 summit in Cornwall next month, to which the Australian prime minister has been invited.
The proposed deal is being strongly resisted by George Eustice, the agriculture secretary, and Michael Gove, the Cabinet Office minister, who fear a domestic political backlash from farmers and environmental groups.
A deal, which could land hardest on Scottish hill farmers, also risks fuelling the debate over Scottish independence, with Ian Blackford, the leader of the Scottish National party at Westminster, warning at prime minister’s questions on Wednesday that a zero tariff deal would “end a way of life that has endured for generations” — a claim rejected by Johnson.
The Australian beef industry is pushing Canberra to insist on the removal of all tariffs and quotas in the bilateral trade deal that would enable it to regain a foothold in the UK market, which became prohibitively expensive when the UK joined the European Community in 1973.
“The UK is a very high quality market and represents a really good opportunity for our premium beef products. London, in particular, offers significant potential for expansion,” said Killen.
AACo owns and operates 7m hectares of farmland, feedlots and properties, which would cover almost a quarter of the UK’s entire landmass. The sheer scale of Australian beef producers — AACo has a herd of 340,000 cattle — is one of the reasons UK farmers oppose providing tariff and quota free access to the UK market.
Under the existing trading regime, Australian beef exporters face a blanket 12 per cent tariff on beef products, with a surcharge of between £1.40-£2.50 per kilo depending on the cut, and an annual lower tariff quota of 3,761 tonnes.
UK farmers have also raised concerns about farming standards in Australia, with hormonal growth promoters used in around 40 per cent of cattle. These products are banned in the UK and the EU.
Killen said hormones did not pose a problem because most Australian farmers did not use them for export and neither did AACo. Australian farming standards are very high, he added.
David Littleproud, Australia’s agricultural minister, rejected UK farmers’ concerns, describing them as protectionism.
“Australia’s production systems are different to the UK and to compare animal welfare standards is like comparing apples to oranges and is not a basis for protectionism considering the subsidies UK farmers enjoy,” he said.
Australia’s National Farmers’ Federation said the nation’s beef farmers did not pose a threat to UK farmers’ livelihoods, noting the volume of exports was currently very small.
“The aim of any free trade agreement is to provide both parties options. Australian red meat producers would like to have the option to export to the UK if and when the UK needs it,” said Fiona Simson, NFF president.
Source: Economy - ft.com
