Rising beef exports to Asia and the US will not compensate for the loss of sales into the UK market if there is a hard Brexit in January, Bord Bia is warning.
he food promotion agency says beef producers must diversify to markets outside Europe, even though this can’t happen fast enough to counter a devastating loss of UK sales if a Brexit trade deal is not agreed.
Sales are rising sharply in several new markets, including China and the US, Bord Bia figures show.
But such gains would barely dent the losses facing beef farmers in January 2021 if there is no UK trade deal. Britain says it will impose tariffs ranging from 62pc to 107pc on Irish beef if it can’t reach agreement with the EU.
“It is a genuinely huge risk,” said Bord Bia chief executive Tara McCarthy. “Britain is our most important market and the highest-paying market in Europe for our beef. When the British decide what tariff they will apply, Ireland has no influence on that decision.”
Britain’s proposed regime would slap a 72pc penalty on boned chilled beef, which represents about two-thirds of our nearly €1bn in annual beef exports across the Irish Sea.
A 107pc tariff would be added to boned frozen beef, Ireland’s second-highest beef export to the UK, commonly used for burgers. Ireland’s relatively low exports of unboned beef, from carcasses to specialist steak cuts, would be hit with a 62pc tariff.
These would be the highest tariffs ever imposed on Irish food exports, according to Bord Bia’s senior manager for meat and livestock, Joe Burke.
“Obviously even a tariff of 62pc on our products going into the UK would wipe out the vast majority of this trade,” Mr Burke said.
Britain today imports a third of its beef, three-quarters of that from Ireland. If tariffs made Irish beef uncompetitive, Britain might turn to suppliers offering cheaper beef in South America, competing with the EU’s 2019 trade treaty with the Mercosur states.
Bord Bia is building markets for Irish beef in China, where steak cuts popular in the West are barely recognised, and in other Asian nations.
This year, as beef exports to the UK and EU fell amid Covid-19 disruption, they have accelerated in the Far East.
In the five months to May, Chinese imports of Irish beef jumped by 134pc to €22.5m. Demand in the Philippines rose 62pc to €18.2m, while beef trade with Japan went from almost nil a year ago to €7.3m. Ireland is still trying to crack the South Korea market.
Different meat cut preferences mean that Asian markets help Irish processors to sell more of a carcass, boosting efficiencies.
But beef products that command top prices in Europe don’t sell well in Asia, so it can’t replace the importance of the UK.
“We wouldn’t be able to sell our steak cuts in China because they don’t really recognise those cuts,” Mr Burke said. “Here, steak cuts would sell twice to three times per kilo versus what mince would sell for. In China that differential doesn’t exist at all.”
Conversely, flank steak and cheaper forequarter cuts are valued in China in stews, stir fries and hot pots, as is the meat between ribs consumed as barbequed ‘rib fingers’.
Ms McCarthy said beef can be tougher to market abroad because big retailers here and in the UK have wanted to control that branding themselves.
“There’s very limited brands in meat in general but specifically in beef, because retailers have chosen beef as their calling card. You go to that supermarket because you believe it has good beef. The retailers want to own that,” she said.
In the US, where grass-fed and hormone-free Irish beef can be marketed as a premium product, food processing company Kepak has placed the Celtic Beef brand in Roche Brothers supermarkets throughout New England. Its marketing conjures an Ireland where cows graze on “lush grass that grows deep and thick, where soft rain flows over fertile soils”.
Beef exports to the US have grown in the first five months of 2020 by 130pc to €15.5m.
While the US is one of the world’s biggest beef producers, its consumption outstrips production, Mr Burke said.
“The US is one of the biggest importers of forequarter beef for their burger industry. They are an importer, particularly from Australia and New Zealand. They could increase their volume of Irish beef,” he said.