Direct payments essential to beef sector

By Liz Newmark

- Last updated on GMT

Beef famers make more money through EU direct payments than by selling meat
Beef famers make more money through EU direct payments than by selling meat
The European beef sector must keep its direct payments at a time when the European Union’s (EU’s) Common Agricultural Policy (CAP) is under review, according to new research highlighted by the European Parliament.

‘The EU cattle sector: challenges and opportunities – milk and meat’ report (1), published on 27 February by the parliament’s agriculture and rural development committee, said these payments played an important part in farm-household income. Direct payments were more important among specialised beef fattening farms than among dairy farms, the researchers noted. It emphasised that beef farmers received more money from EU direct payments than they did by selling beef.

The 176-page study​ added that, with milk and beef production expected to increase over the next 10 years, effective marketing strategies, including EU funded programmes, were essential to stop increased supply resulting in lower product prices. These strategies should include product diversification in the EU and export growth outside the EU in key markets including China, Egypt and Indonesia.

The importance of overseas trade to the EU meat sector was the key message of the 190-page report​ ‘Impacts of EU trade agreements on the agricultural sector’ (2) launched by the European Commission the same day.

Tax system complicated

Referring to five case studies, including one on Danish pigmeat exports to South Korea, the report by consultancy Copenhagen Economics examined the effects of the EU-Mexico, EU-South Korea and EU-Switzerland trade agreements. EU agriculture commissioner Phil Hogan said these agreements had “increased EU agri-food exports by more than €1 billion​”.

In the meat sector, the report concluded that the EU-South Korea FTA [free trade agreement] added €439m in additional EU agri-food exports in 2015, mostly in primary products such as meat, increasing European pigmeat production. Improved access to the South Korean market stabilised prices and drops in prices for pig producers due to the Russian import ban, were avoided or reduced, it said.

However, the consultants added that EU exporters, in this case particularly small Danish companies, were not always fully aware of tariff reductions resulting from a new trade agreement and found special low-duty quotas complicated to use.

The report further concluded that responses to new additional trade agreements depended on the attractiveness of the new export market relative to others (in this case China and Japan). Other important factors were the extent to which consumers in the new markets would choose imported goods over local products and environmental concerns.

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