The announcement by Prime Minister Theresa May that China will lift its BSE ban on UK beef is welcome news. However, it is important to note that this is the beginning of a process, and not an indication that the first shipment of beef can be despatched the day after the announcement is made that the ban is lifted.

A useful case study on the process of getting approved is the Irish experience. Back in February 2015, it was announced that the BSE ban was lifted by China for Ireland. Great expectations of exports were expected, but now three years later not a kilo of beef has been exported from Ireland to China.

The reason for this is that lifting the BSE ban is just a step on the way to getting approval. Once that decision is made, the Chinese inspectorate undertake an in depth inspection of country controls and a protocol is agreed. This takes several months back and forth. When satisfaction is achieved with the controls at a national level, the process of individual company approval begins – which involves inspection by a different agency.

Benefit of low incidence BSE status

When Ireland does get approval, it will be for beef from cattle under 30 months, which is due to the BSE legacy and current risk status with OIE – the world animal health organisation that defines global standards.

This is where Scotland and Northern Ireland have an edge with their negligible risk BSE status, which is the highest level that can be achieved.

As well as enhanced animal health status, the most practical outworking of this is that both Scotland and Northern Ireland shouldn’t be restricted to under 30-month cattle.

However, as this negotiation is with the UK, it will be interesting to observe if the higher status achieved in Scotland and Northern Ireland is recognised, or will exports be on a UK-only basis, which would mean that the standards associated with the controlled risk status of England and Wales would prevail.

Market potential

China is one of the last great frontier markets for beef exports. Its growing wealth and parallel growth in demand for western diet means a a year-on-year growth in demand for beef.

Also because it isn’t considered a staple food requirement by the Chinese government, like rice and pork, hence the country isn’t as concerned about imports and their impact on domestic production.

It is a market that has doubled in the past five years and is now approaching 1m tonnes annually.

China confines imports to just a handful of countries, with Brazil (which just resumed trade in 2016) being the leader, shipping 460,000t to China and Hong in 2017.

Uruguay is the next largest supplier, with 160,600t shipped in 2017, while Australia is on 106,500t.

Argentina has been re-growing its beef industry ,since the election of a free markets government in late 2015 meant the end of export tariffs on beef. In 2017 it exported 96,000t, which was 46% of its total exports and New Zealand exported 67,000t.

Australia and New Zealand are at an advantage in trading with China, as beef is subject to an import tariff of 12%. They have a free trade agreement since 2015, which will lead to the elimination of this tariff over the following nine years.