What are our future trading prospects after we leave the EU?

Two inter-twined, but seemingly contradictory, narratives dominated an AHDB conference looking at UK agriculture’s export prospects. One was a tale of huge export growth opportunity, the other of unprecedented uncertainty with Brexit around the corner. Alistair Driver reports

GLOBAL PICTURE REMAINS POSITIVE
Despite various challenges around politics, changing consumer perceptions and animal disease, the long-term global outlook for meat is very positive, according to Gira’s Richard Brown. “We are in a growing meat market, which is terrific news,” he said.

Global meat consumption has been rising steadily over the past decade and that is set to continue.

Key trends include:

  • Global meat consumption is forecast to rise by 55 million tonnes, 17%, to reach 372mt between 2017 and 2027;
  • Pork consumption rose by 19% between 2007 and 2017 to reach 117mt and is predicted to rise by a further 11% to 130mt in 2027;
  • The biggest driver of growth in global meat sales, however, is poultry, forecast to rise by 25% to 148m t by 2027;
  • Most regions of the world will experience meat consumption growth, with North Asia, including China, leading the way at 17%. Strong growth is also forecast in South East Asia and North and South America.
  • Just about the only place where consumption is forecast to remain flat is the EU, highlighting why international trade is becoming so important to the UK meat sector;
  • The volume of meat traded globally is forecast to soar by 21% over the next decade, with the volume of pork traded set to reach 10.5mt in 2027, up 35% on 2017; and
  • Unsurprisingly, China, is forecast to be the biggest net meat importer in 2027, with South America and North America the biggest exporters, followed by the EU and Oceania.

This growth in demand is resulting in ‘quite substantially higher real prices for meat’, Mr Brown said.

He listed the positive drivers for growth, including global population and income growth and increased urbanisation, with social change contributing to greater demand for meat. Supply chain changes, including productivity gains supported by upscaling and technology, will increase the availability and affordability of meat, while improvements in the likes of meat marketing, food safety, shelf-life, quality, consistency and convenience will all help.

Mr Brown identified a number of potential ‘brakes’, too, including political and economic uncertainty and the rise of ASF. There are growing ‘social pressures’, too, such as consumer concerns over animal welfare, the environment and negative health implications associated with meat, resulting in a rise in vegetarianism and flexitarianism and driving meat alternatives.

“There will be a need to change businesses and for a huge communication exercise to explain the benefits of eating meat,” he said.

“But the fundamentals for meat around the world are unbelievably powerful and the drivers exceed the brakes.”

But he went into more detail on some of the uncertainties, too. What happens in China, as the world’s biggest producer and consumer of pork, will be ‘unbelievably important’ in shaping the pork market over the next few years, he said. China is undergoing a major agro-industrialisation programme to boost domestic production, although these plans could be hampered by its ‘major African swine fever problem’, potentially forcing it to import more.

But he warned that if China is successful in boosting its domestic output, the US ‘could be in for a shock’ if it expects to re-direct its extra pork there, while EU export plans could also be thwarted, resulting in a ‘lot of pork sloshing around’.

Turning to Brexit and the risk of a no deal, in particular, he said: “We are standing on a cliff edge. It is unbelievably serious. Nobody likes uncertainty and we have got it in dollops with food policy, farm policy and trade policy. Farmers and processors need to be very careful,” he said.

He also stressed the need, as the UK formulates a post-Brexit farm policy, to ensure farming is ‘not left behind’ the rest of the world where upscaling and intensification, with increasing use of technology and automation to boost productivity, is increasingly common.

Pork sector eyes further export growth
The UK pork sector is eyeing further export growth in China and other existing and new global markets after we leave the EU.

AHDB international market development director Phil Hadley updated the conference on recent UK export growth and AHDB’s work with the industry to facilitate it, including supporting Government on access negotiations, developing contacts, networks and market intelligence and accompanying exporters at international trade shows.

Among recent export successes, UK pork exports to China were worth £70 million
in 2017, while the recently signed Taiwan deal is expected to be worth an estimated £50m over five years. The first commercial shipments are set to leave imminently, after the first shipment was dispatched for a Ministerial launch.

But the EU remains by far the biggest market for UK agriculture and there was enormous concern expressed at the conference over the prospects of a ‘no deal’, which could result new tariffs, delays and added bureaucracy and costs for exporters.

“For the pigmeat sector, anything that stymies trade or adds costs will be a problem, but it is probably able to weather it a bit better than some of the other sectors,” Mr Hadley told Pig World.

But he stressed that it should be relatively straightforward to continue trading with non- EU countries, such as China, where the UK has bilateral agreements in place relating to specific products, after March 29, 2019.

“These deals will roll forward,” he said. “We will update the certificates and export health agreements to recognise an equivalent standard in the domestic legislation. This represents an administrative change, but no change in procedure.”

Third country exports will become increasingly important as global trade widens, he said. “It is about placing the right product in the right market at the right time for the right price to maximise the value of the whole pig.”

Future target destinations for pork exports include further growth in Asia, as well as Mexico and South America.

AHDB Pork chair Mike Sheldon said he was ‘optimistic’ about the opportunities for the British pig industry to secure a place in the world market. But he said, as a relatively small player on the global market, the focus should be on value, not volume.

“The world market is huge and growing,” he said. “It is about identifying where the best value is in the world for each piece of the carcase. There is an increasing opportunity for higher value products. Even if we are only a small part of those markets that has enormous potential benefits for us,” he said.

The British Pig Association is accredited by the Department for International Trade as a Trade Challenge Partner, working alongside it to promote export opportunities. BPA chief executive Marcus Bates said the association had been working with AHDB and others to come up with a coherent export strategy for UK agriculture, stressing the ‘massive potential’ for export growth.

He said there was also ‘a lot of potential for trade in Africa’ – the BPA will be visiting Nigeria in November. It has also been exploring the potential for pig genetics in India and the Indian Government has invited it there to make a presentation.

 

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About The Author

Editor of LBM titles Pig World and Farm Business and group editor of Agronomist and Arable Farmer. National Pig Association's webmaster. Previously political editor at Farmers Guardian for many years and also worked Farmers Weekly. Occasional farming media pundit. Brought up on a Leicestershire farm, now work from a shed in the garden in Oxfordshire. Big fan of Leicester City and Leicester Tigers. Occasional cricketer.