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Free trade to fuel UK demand for Aussie red meat

There’s been plenty of talk around the free-trade agreement between Australia and the United Kingdom, agreed to ‘in principle’ by the two countries last month. Previously part of the European Union trade negotiations, the UK’s exit from the EU created an opportunity for new discussion on free-trade with both parties - for the first time in nearly half a century.

The UK market is relatively small for Australian red meat currently on a global level. Most data available includes UK figures in the EU totals, but we can see the UK receives a majority of the Aussie sheepmeat headed to Europe, but only about a quarter of the beef.

So exactly how much Aussie red meat ends up in the UK right now? Not much is the short answer. For the year-to-May, 2 % of all lamb exports have been UK bound, a total of 2,190 tonnes shipped weight. Annually on a five-year-average, the UK takes just over 6,500 tonnes of our lamb. This is a small market compared to say China or the US, each which take on average about 25 % of Australian lamb exports, but it is a majority of the entire European market – which in total is 3 % of the market (this includes the UK’s 2 %). The UK imports even less Australian mutton, with just 843 tonnes swt headed there for the year-to-date. Total sheepmeat exports to the UK are down 15 % for the year-to-May (compared to 2020), and annual volumes sent to the market have been decreasing year-on-year since at least 2014.

Australian beef exports to the UK have plummeted this year, with the year-to-May total down 71% year-on-year. Again, beef exports to the UK have been falling for the past five years, from 9460 tonnes swt in 2015 to just 1566 tonnes in 2020. This year, only 272 tonnes of Australian beef has been exported to the UK so far, 100 % of which was grainfed. According to Meat & Livestock Australia’s records, in the past decade Australian beef exported to the UK has gone from being close to 100% grassfed in 2010 to being nearly 100% grainfed in 2020. In comparison to sheepmeat however, the UK only made up 26 % of the beef exports to the EU in 2019.

Commodity Conversations

What does it mean?

All tariffs on Australian red meat headed to the UK will go by the wayside after 10 years, and duty-free quotas will be lifted each year during that time. While UK demand (or Australian supply for that matter) is not expected to explode overnight, it will open the door for more high-quality Aussie grainfed beef to be eaten by Britons, as the current quota on that product (shared with EU) is being filled within weeks. It will also put Australia on a more even playing field with lamb from New Zealand, which currently enjoys much better market access.

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Key Points

  • Australian red meat exports to the UK have dipped significantly for the year-to-May, down 15% for sheepmeat and 71% for beef.
  • UK has historically accounted for a majority of all EU imports of Australian lamb, and a quarter of beef.
  • Brexit has allowed for new Australian-UK free-trade agreements for the first time in 48 years, resulting in red meat tariffs being eliminated over next 10 years.

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Data sources: Mecardo; Meat & Livestock Australia; Department of Foreign Affairs and Trade, AHDB,  Mecardo

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