Beef Quarterly Q1 2018: Trade Agreements and Increased Production
A number of trade agreements, such as the Trans-Pacific Partnership (TPP) and a proposed Mercosur/EU trade agreement, look set to start having an impact on global beef trade in 2018. At the same time, applications of blockchain technology are now being widely developed in the food industry, with opportunities to realise benefits further up the supply chain growing, according to the RaboResearch Beef Quarterly Q1 2018.
Download the latest quarterly
Download the full report
Food and tech companies are developing blockchain as a solution in response to changing consumer preferences, and the beef sector is no exception. “While many of the early applications have been driven by the desire to increase traceability and transparency, with a focus on food safety, opportunities do exist further up the supply chain,” according to Angus Gidley-Baird, Senior Analyst – Animal Protein.
Blockchain is superior to current solutions when it comes to sharing genetic traits, making it simpler to track productive performance. A chain including, among others, the producer, feedlot, farmer, and genetic organisation would be able to share performance and verify breeding values, which is all transferred in real-time in the transaction.
The shared-ledger approach of blockchain dramatically simplifies back-office processes such as transaction reconciliation and reporting: a benefit for both beef processors/packers and farmers. Previously, where reconciliation required collating and cross-checking paperwork from multiple sources, the technology now instantly reconciles the transaction between all parties.
Comprehensive and Progressive Agreement for Trans-Pacific Partnership
The 11-member version of the Trans-Pacific Partnership (TPP) looks set for formal signing in March (although respective governments need to sign off on the details before implementation). Gains are expected for beef-exporting countries Australia, New Zealand, Mexico, and Canada—through reduced tariffs into key global beef importer Japan, plus reduced tariffs into smaller importing countries Chile, Vietnam, and Peru.
China further opens beef market to the world
China is allowing more beef imports and importing countries, intensifying competition in the market. Chilled beef access has been granted for Argentina—the fourth country behind Australia, the US, and New Zealand to be granted such access. In frozen beef, Belarus has obtained approval, and two facilities were officially accredited in January. China has also signed a protocol for importing beef from France and the UK, and will likely begin shipments in the coming months. In addition, the first boatload of live cattle exports from northern Australia—the main live-cattle export region—arrived in January. This boatload is the strongest indication that a live-cattle trade may become more permanent.
Mercosur and EU trade agreement
A new proposal to allow Mercosur countries to send 99,000 tonnes of beef to the EU at a lower tariff level has been tabled as part of this long-running trade discussion. This is a significant volume, given total EU beef imports over the last couple of years have been between 204,000 tonnes and 270,000 tonnes. Brazil, Argentina, and Uruguay are already the EU’s main suppliers (together accounting for 63% of total EU imports)—Brazil alone accounted for 107,000 tonnes in 2017. Mercosur negotiators are apparently seeking an increase, to 150,000 tonnes. This standoff may further prolong the discussions, which already run the risk of delay due to the Brazilian elections.
2018 US production looking even stronger
Predictions at the end of 2017 had US beef production growing by more than 3%, or an additional 360,000 tonnes. At the start of 2018, with updated cattle numbers, favourable market conditions, and given that large areas of the US are in drought, production increases have been revised by up to about 5%, or some 700,000 tonnes.
Angus Gidley-BairdSenior Analyst - Animal Protein Read more
RaboResearch Food & AgribusinessPO Box 17100 (UC 053) 3500 HG Utrecht, The Netherlands