Sluggish 2012 for Beef Exports to Russia

AUSTRALIA - Australian beef exports to Russia slowed throughout 2012, with total exports down 41 per cent on 2011, totalling 32,162 tonnes according to Meat and Livestock Australia.
calendar icon 14 January 2013
clock icon 3 minute read

After two strong years for Australian beef shipments into the Russian market, 2012 saw a combination of factors contribute to a slower year.

A significant depreciation in the Brazilian exchange rate, cheap product coming out of Paraguay, and resurgence in Australian manufacturing beef exports to the US manifested in reduced volumes to Russia.

Although overall export volumes declined, the market for Australian beef can be broken into two distinct markets, chilled product and frozen product.

The vast majority of beef shipments to Russia are frozen (97 per cent in 2012); with Australian beef largely used for further processing. This beef competes with South American product directly, with importers very price sensitive, leaving Australian product exposed to any price decreases from South American suppliers.

High quality chilled beef, mostly going into high end steakhouses, has largely avoided the competitiveness issues associated with frozen beef. Australian chilled beef exports to Russia throughout 2012 totalled 1,109 tonnes, a nine per cent increase on 2011 and 11 per cent above the five year average of 998 tonnes.

Australian chilled product competes for the most part with US product in the high end steakhouse market. Russian imports of chilled US beef in 2012, January to September, totalled 816 tonnes, while imports from Australia for the same time period stood at 768 tonnes (Global Trade Atlas).

Sheepmeat exports likewise avoided the competitiveness issues associated with frozen commodity beef, with overall shipments to Russia up 20 per cent in 2012 when compared year-on-year.

Lamb exports increased 29 per cent, totalling 1,650 tonnes swt, while mutton volumes reached 3,024 tonnes swt, up 16 per cent year-on-year. Increased Australian domestic production, a reduction in Australian sheepmeat prices and limited competition when compared to beef within the market contributed to the increased volumes.

Russia’s recent succession to the World Trade Organisation (WTO) should ensure that market access (excluding technical issues) for beef and sheepmeat remains at least at stable levels over coming years. In 2013, the overall quota for frozen beef remains unchanged, at 530,000 tonnes. Australia has access to 407,000 tonnes of this frozen quota, shared with other WTO countries, while the US (60,000 tonnes), EU (60,000 tonnes) and Costa-Rica (3,000 tonnes) all have separate access to the frozen quota.

The quota for chilled beef is set to increase in 2013, from 30,000 tonnes to 40,000 tonnes.

The EU has access to 29,000 tonnes of this chilled quota, while access for other countries is set to increase from 1,000 tonnes to 11,000 tonnes.

This will provide increased access for Australian chilled beef into the Russian market. Currently, chilled beef shipped to Russia outside of this quota and not classified as ‘High Quality Beef’, attract a 50 per cent tariff.

High quality beef, currently defined as any beef entering Russia at greater than €8/kg, attracts a 15 per cent tariff, with most Australian chilled product entering under this arrangement.

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