An Australia-UK Free Trade Agreement (FTA) was signed in June. Many in the food industry cautiously welcomed the news, Which meant that tariffs would be removed on all UK exports to Australia. In particular, the managing director of the British Frozen Food Federation, Richard Harrow, has speculated that this could offer huge opportunities for frozen food manufacturers.
However, a Horizon report just published by the AHDB points out that British producers could be affected by the fallout from a dispute between Australia and China.
AHDB’s head of strategic analysis, David Swales, said China is an important export market for Australia, especially lamb, and could pose an indirect risk to the UK. “One of the things we highlight in the report is the potential for shock here. We know that China-Australia relations are not at an all-time high at the moment. There are tensions there. -low.
“Big shocks”
“If there were to be a breakdown in relations and China stopped allowing Australian imports of sheepmeat, Australia would have an enormous amount of sheepmeat for which it would need to find a home. It is possible that the Kingdom “Uni is one of the markets where it would seek to send more sheepmeat. It is possible that big shocks and deviations will occur, which could have a greater impact on our domestic market.”
Any increase in imports of Australian lamb to the UK would pose a threat as Australia could compete with domestic producers in terms of cost of production. His farms were much larger and due to the favorable climate, the cost of housing livestock in the winter was less of a problem.
The AHDB acknowledged that the government had the power under the Farm Bill to intervene to protect UK producers in the event of major market shocks by limiting import quotas. That said, Swales said the quotas were set so high that there should be “a pretty phenomenal impact” for them to significantly restrict trade.
Assuming there are no such upheavals, modeling undertaken by Harper Adams University suggested that the impacts of the FTA on UK sheep producers would be negligible due to the overall import / export trade balance. .
“Our model suggests that there will be an 81% increase in Australian lamb exports to the UK. This is significant in percentage terms, but in volume terms it represents around 10,000 tonnes of additional product entering the UK. our market. “ These imports would also compete with existing imports, leading to lower imports from the EU. “As a result, we believe that the changes in our domestic market will be relatively small.”
Dairy potential
The FTA offered the best opportunities for UK dairy farmers, Swales said. There was potential for increased trade in dairy products in both directions. Australia produces 9 million tonnes of dairy products per year, but this number has been steadily declining in recent years. It exports cheese, but also imports cheese and butter. “This is another area where there could be some potential for the UK to access its market.”
Harper Adams’ modeling suggested that the UK could face a 1,000-tonne net increase in Australian cheese imports to the UK. “But this is where the net flow is the other way, so we would expect 2,600 tonnes of cheese to go in the opposite direction.”
Beef: higher value cuts
On beef, Swales said Australia is a big producer, generating 2.3 million tonnes per year, most of which is exported. Australia already exports beef to markets with good yields, such as the United States and Japan, and it was unlikely to change that pattern. In addition, it would find it difficult to compete with existing low-value beef, such as ground beef, imported into the UK, for example from Ireland.
However, Australia could target the UK with high write-downs, potentially for the restaurant industry. This in turn could have a disproportionately negative impact on domestic suppliers, as much of the value of carcasses comes from higher value cuts.
According to the Harper Adams model, there would be a net increase of over 200% in imports of Australian beef to the UK (12,000 tonnes). “The model predicts that part of this will be offset by a reduction in our imports from the EU. We are not exporting there so there are plenty of offensive opportunities for beef in Australia.”
Pork
Australia had a much smaller pork market and was a net importer, potentially providing opportunities for the UK, Swales said. However, this could be limited by strict phytosanitary rules requiring pork to be cooked soon after entering the market. “For this reason, virtually all Australian imports are frozen and they tend to import most of their pork from the United States, Denmark and the Netherlands.”
The AHDB report is the first quantitative impact assessment of the Australia-UK trade deal. The British and Australian governments worked on their own analyzes, but still deemed the results “too sensitive to be published” according to Swales.
