Australian imported flat iron steak (seamed oyster blade) in a London restaurant

 

MORE than two years after Australia signed its Free Trade Agreement with the United Kingdom, beef trade volumes are slowly starting to grow into both the UK and to some extent, nearby European Union nations.

Local European and UK beef herds are continuing to trend down in size, putting pressure on local beef production volume. Irish, UK and European cattle prices have all gone ‘through the roof’ as a result, at least partially related to the region’s ‘green’ policies initiated a year or two ago on livestock raising, that are now being expressed in cattle availability.

These ‘sustainability’ measures are imposing higher costs on the European producers supply chain, pushing prices to record highs this year. (note today’s second article suggesting the EU may roll back some of its deforestation legislation).

For the fiscal year ended 30 June, Australian beef exports to the EU have reached 16,567t, up 45pc on the previous year, and two-and-a half times the volume seen in 2022-23.

Exports to the United Kingdom last financial year reached 9860t, more than double the 4594t seen a year earlier, and more than nine times higher than the 2022-23 year, when just 1025t was shipped. Value-wise, Australian beef and veal exports to the UK were worth $97.8 million in calendar 2024, more than double the previous year, eight times as high as in 2022.

While that sounds encouraging, the export numbers are small compared with earlier eras, when both grain and grassfed Australian beef exports under the old Hilton quota and the more recent High Quality Grainfed EU quota (35,000t) were much higher.

In fact the EU ranked only eleventh among Australian export customers last year in volume, and the UK, fifteenth. But both are quality markets, among the highest-paying of all Australian beef customers, on average $/tonne value.

While the UK broke away from the European Union after its BREXIT vote back in 2020, most of the trading terms for Australian beef into the UK continue to function under suffocating EUCAS regulations.

Progress towards an ‘open herd’ model in HGP-free eligibility for Australian beef heading to the UK has been painfully slow, and remains a topic of acute sensitivity, at government-to-government and industry-to-government level.

Inevitably, a lot more meat would head to the UK under a more liberal and easier to manage open-herd HGP-free model, Beef Central was told by trade sources.

The current Free Trade Agreement between Australia and the UK entered into force in May 2023, amid breathless concerns among UK farmers that the market would be swamped with Australian beef of “dubious quality, food safety and animal welfare”.

Instead, the market has trickled along, at snail’s pace until relatively recently.

Across on mainland Europe, Free Trade Agreement negotiations with Brussels have only recently resumed after being put on ice in 2023, and appear little closer to a resolution, despite a European visit by Australian trade minister Don Farrell last month.

Global tariff impacts led by the US may help promote the cause, however some big meat-producing EU member countries like France clearly have reservations about opening the bloc’s markets to potential competitors like Australia. Such concerns are also holding up trade access talks with South American countries.

Record high UK cattle prices

Declines in UK beef production, much of it linked to environmental regulation on grazing land, have forced UK cattle prices to record levels this year.

Agriculture industry body AHDB quoted the GB all-prime deadweight average 634p/kg in the week ending 5 July. At today’s exchange rate of A$2.05 to the pound, that’s the equivalent of A$13/kg carcase weight (note: we have no way of determining standard carcase dressing in the UK versus Australia, eg kidney fat and channel fat). In comparison, a four-tooth grass ox in Queensland this week is making 650c/kg carcase weight, and a 100-day grainfed ox October delivery 700c/kg.

UK carcase prices remain around £1.50/kg ahead of the same week last year and more than £2/kg ((+A$4/kg) above the five-year average, the AHDB said in a report last month. A 350kg prime steer carcase in the UK is worth an extra £738 on average compared to last year, the body said.

Cattle supply has been a key influence on the direction of the UK beef price. Longer-term reductions in cow numbers and fewer young stock moving through the supply chain has tightened availability, subsequently driving competition and contributing to price growth, AHDB said.

“Lower cattle inventories are not just a driver in the UK,” it noted. “There are well-documented shortages in key markets around the world, namely the US and Europe. This is supporting prices on the global market.”

As reported earlier on Beef Central, some UK farmers and interest groups remain up in arms about the perceived threat of Australian beef, wrongly saying it is universally produced with the aid of hormonal growth promotants, and managed under inferior animal welfare and environmental standards.

At the same time they fail to point out that Australia has supplied the UK successfully with guaranteed HGP-free beef for the past 50 years, under carefully regulated and audited systems. Read some interesting reader comments on the criticisms levelled at Australian beef here.

Growing interest at retail

While Australia’s small, but growing beef trade into the UK is mainly directed into the food service sector (hotels, restaurants, pubs and clubs) there have been some small inroads made into the supermarket retail segment. Major chain Morrisons now stocks Australian steaks, while up-market Sainsbury’s has stocked Wagyu beef from NZ.

Somewhat controversially, Morrisons did a backflip on its previous policy of British-sourced meat only. Morrisons now sells Aussie-grown and imported meat under a new labelling called Limited Edish, with ribeye and sirloin steaks prominent.

The Aussie beef on offer has been positioned in terms of pricing between the Morrison standard domestic steak range and its top-tier premium range, with the Aussie version coming in at a retail price of A$61.50/kg (GBP30/kg).

Aussie beef is sold as Limited Edish Sirloin Steak in Morrisons retail outlets as shown in this 200g Darfresh pack,  packed in the UK by Myton Food Group

While many British consumers clearly prefer to buy domestic supermarket beef for their Monday through Thursday at-home meals, many going to the local pub on a Friday night  probably have no idea they are eating an imported steak.

“At current pricing levels for domestic cattle and beef, its only a matter of time before Australian product starts to push more into UK retail,” an export trade contact said. “Lamb has been the entry point at UK retail, but beef is slowly following.”

Typical UK demand for Australian beef is for loin cuts, plus butt cuts for roasting for pub meals. Grainfed has typically gone to the EU countries, and grassfed to the UK, where lotfeeding is rare and marbling less valued among British consumers. Trimmings is a sparse market for Australia at best, at this stage, the trade source said.