Speaking at a recent seminar on EU imports in Scotland, Stuart Ashworth, head of economic services for Quality Meat Scotland, said Brazil was keen to see import tariffs reduced either through World Trade Organization, Mercosur or bilateral agreements.
Previous restrictions had been imposed on Brazil following issues over safety and a lack of approved cattle farms. Ashworth told delegates: “Not surprisingly, UK imports from Brazil fell 80% between 2007 and 2008 and continued to fall through until 2011. During 2012, however, imports doubled, but still remain about 85% lower than in 2007.”
He said any change to the regime would have impacts on Scottish producers: “Clearly, the first point of contention is that Brazilian beef would be available at much reduced prices. Irrespective of what the world price is, by removing Customs duties, the product would become cheaper. It would also be highly likely that this ‘cheaper product’ would be at world prices, which are currently lower than European producer prices.
“A second impact would emerge from exporting nations ‘cherry picking’ what they supply around the globe – choosing the highest-value market for each different cut. The consequence of this for the importing nation, with whole carcases to sell, is that the overall ‘carcase balance’ in the market changes and individual carcase realisation values come under pressure.”
However, he did point out that even if the trade barriers were removed, it did not guarantee Brazil would increase its beef imports.
He said: “That would depend on the relative state of the global demand for beef and if the main demand lies outside the European Union then that is where trade will take place.
“Nevertheless, it is inevitable that Scottish producer prices would move closer to world market prices, although they are still likely to retain a premium, built on product quality and provenance.”
Whatever happens, Ashworth said there was a high chance of greater volatility in prices.
“For example, during 2010 and into early 2011, the gap in beef prices between the major global beef exporters and Europe narrowed significantly. However, as 2011 passed into 2012 and the global economy slowed down, the gap has widened again.
“It is therefore impossible to say with certainty what a greater volume of Brazilian beef on the European market would do for Scottish producer prices. However, it is almost certain that it would lead to lower farmgate prices and greater volatility in those prices.”