The revelation that South Korea is on the point of approving beef imports from Ireland is further good news for the sector. It is the fourth biggest beef importer in the world and the USDA recently increased its forecast for 2021 from 540,000t to 560,000t carcase weight equivalent (CWE).
The main terms and conditions are that beef is from cattle under 30 months, as is the case for China, but unlike China bone in beef will be included.
Getting access to South Korea is an achievement for the Department of Agriculture and as Bord Bia explained last week, the boots are on the ground so we should be able to hit the ground running.
However, it will take weeks – if not months – for the South Korean parliament to ratify the approval and even then there are limitations as to what can be achieved when business commences.
South Korea, like its neighbour Japan, is a beef market that has been progressively increasing over the past decade. However, supply is dominated by the US and Australia who between them supply over 90% of the beef that is imported.
Irish beef and offal exports to Japan reached 4,800t shipped weight (SW) in 2020, up from 2,477t in 2019
Breaking into that will take effort and the pattern with Japan as a customer for Irish beef is likely to be repeated. It too is heavily reliant on well-established US and Australian importers. Irish beef and offal exports to Japan reached 4,800t shipped weight (SW) in 2020, up from 2,477t in 2019. Incremental increases in exports are assisted by the progressive reduction of tariffs from 38.5% down to 9%.
Irish beef exports to South Korea will also benefit from a reduced tariff of 15% that will fall to zero by 2027.
China is game-changer
While these developments are all positive, they aren’t the potential game-changer that China could be if we can get our exports restarted.
Irish exports were starting to move in the first five months of 2020, reaching 7,400t (SW), despite the impact of COVID-19.
What makes China so lucrative is the size of the market and the unprecedented rate of growth in beef imports over the past decade
Nothing has happened since then with exports suspended due to the discovery of a BSE case last May, despite the intervention of the Taoiseach and Minister for Agriculture.
What makes China so lucrative is the size of the market and the unprecedented rate of growth in beef imports over the past decade from just a few thousand tonnes to 2.5m CWE in 2019, Hong Kong (HK) included.
Last year, this reached 3.3m tonnes CWE and USDA are forecasting this will increase to 3.6m tonnes CWE. This is 39% of all the beef that will be imported in the world this year and starting from a base of 1% at the beginning of the last decade.
With demand like this, China now sets the global beef price. On the supply side, Brazil and Argentina have increased export capability, though Argentina is again considering restricting beef exports.
The USDA forecasts 2.75m tonnes CWE total exports from Brazil in 2021, which is an increase of just under 1m tonnes on the 1.8m tonnes exported in 2017.
Argentina is forecast by the USDA to maintain 770,0000t CWE, a levelling off following the surge in growth between 2016 and 2019.
An additional factor favouring Ireland is that most of our major beef-exporting factories are approved for China
While all Asian markets have the potential for increased Irish beef exports, it is China that has the capacity to absorb huge volumes without displacing any other supplier in the process.
Also, Australia, Argentina and New Zealand, major suppliers to China/Hong Kong, are forecast by the USDA to have reduced availability of supplies for export this year.
This will be offset by increased exports from Brazil and the US but there is little doubt that if Ireland can secure approval to recommence supplying, real business can be done in China.
An additional factor favouring Ireland is that most of our major beef-exporting factories are approved for China, so it will be a case of picking up where we left off and building on it.