The US reopened for Irish beef exports at the start of 2015 with the ambition that it would become a substantial market for Irish beef alongside Irish dairy and drink exports.
However, while sales of whiskey and butter in particular have soared over the past decade, it never happened for beef.
There had been an expectation that the US would become a market for high-value beef cuts that could be promoted on heritage and that our grass-fed credentials would be a compelling alternative to US grain-fed beef.
However, US beef consumers, like many others around the world, have a liking for the grain-fed product with high levels of marbling.
Also, the US is a consistently major exporter of high-value beef cuts and while it is the world’s second-largest importer of beef, most of the 1.2m to 1.5m tonnes it imports annually is forequarter cuts used in mince and burger manufacture.
For this cheaper product, an additional cost of 26.4% by way of import tariff made any Irish offering very expensive, particularly when compared with the prices offered by Australian, Brazilian and New Zealand suppliers.
Different processing techniques
As much of the beef imported by the US is a composite product drawn from many carcases and different parts of the carcase, a further problem is created for Irish exporters.
In the US, carcases are washed with a chlorine-based acid that kills any contamination on a beef carcase, but use of this product is banned in the EU, where the focus is on using only butchery techniques.
While this is perfectly adequate for a cooked product, it doesn’t achieve the same level of freedom from contamination that washing delivers, so there is always some level or product rejection risk for composite products coming from Ireland, less so with prime beef cuts.
Therefore, while the 26.4% tariff may be removed for the coming weeks, the risk of rejection for a large category of product that the US imports will discourage Irish exporters, particularly when they have alternative market options.
Not all factories approved
At 20 July this year, only eight Irish beef abattoirs and a beef cutting plant were approved by the United States department of agriculture (USDA) to supply beef to the US.
This means that even if an opportunity becomes available, several Irish beef processors cannot take advantage of it until they have completed the challenging approval process and the potential for maximum Irish beef exports to the US isn’t achieved.
From a company commercial perspective, if they aren’t planning to do business in the US, there is no benefit in having approval and, in recent years, it was clear that the commercial opportunity wasn’t there.
The reality is that Irish beef has been uncompetitive in the US, particularly in relation to Australia and New Zealand, which have large tariff-free quotas, and Brazil, which grabs the entire quota that Ireland has access to within the first few week of every year.
There is also the issue of Ireland having preferential access to the EU and UK market, being a member of the EU, with geographical location providing an additional competitive advantage in the UK.
Better alternative markets
Therefore, a three-month respite from paying an import tariff in the US is unlikely to result in Irish beef processors changing their marketing strategy.
There may be some opportunist trading during the window, but the short-, medium- and probably long-term future for the majority of Irish beef exports is to the UK and EU markets.
SHARING OPTIONS