Developments of EU Trade - European Commissionec.europa.eu/agriculture/sites/agriculture/files/sheep...2016/02/25 · Developments of EU Trade by Lionel Colby, Independent Consultant

LJ Colby February 2016

1

Second EU Sheep Meat Forum: 25 February 2016

Developments of EU Trade

by Lionel Colby,Independent Consultant

Member of EU Sheep and Goat Meat Forecasts Group(since it was set up in 1985 by Michel Broders!)

With the support of AHDB MI and AHDB Beef and Lamb

E-Mail: [email protected]

LJ Colby February 2016

2Presentation outline

• Three product categories:– Live sheep– Sheep meat– Offals– Including product from light/heavy lambs

• Major markets for EU exports:– Current situation and future prospects

• Major EU exporters• Key export competitors• Market access issues:

– Approval of importing country– Trade agreements including Free Trade Agreements (FTAs)

LJ Colby February 2016

3

Progress being made with sheep meat exports but from a low base to:- Middle East/North Africa- Western developed economies

EU sheep meat exports by region, 2007-15

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2007 2008 2009 2010 2011 2012 2013 2014 2015(e)

Source: AHDB, GTIS, Eurostat

tonn

es

OtherOther AfricaWestern developed econ.Middle East/North AfricaH/K, China, Vietnam

LJ Colby February 2016

4Middle East/North Africa taking light lamb, mainly carcases:- Supplied by Spain (to Algeria, UAE), Romania (to Jordan)- Tradition of consuming sheep meat - Growing population, construction boom, food service growth:

- but oil price, future economic growth?- Very competitive market (Australia, NZ, India)

EU sheep meat exports to Mid. East/N. Africa, 2007-15

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2007 2008 2009 2010 2011 2012 2013 2014 2015(e)

Source: AHDB, GTIS, Eurostat

tonn

es

OtherUnited Arab EmiratesTunisiaAlgeriaJordan

LJ Colby February 2016

5Other Western Europe taking heavy lamb (cuts and carcases):

- Supplied by UK and Ireland- Limited import demand, small sheep meat markets- But long term prospects in North America?

EU sheep meat exports to Western developed economies, 2007-15

0

1,000

2,000

3,000

4,000

5,000

6,000

2007 2008 2009 2010 2011 2012 2013 2014 2015(e)

Source: AHDB, GTIS, Eurostat

tonn

es

OtherNorwaySwitzerland

LJ Colby February 2016

6

China long term growth potential?:- Competitive advantage of Zealand/Australia (helped by FTAs)- Become a key driver of global market

Chinese imports of sheep meat, 2007-15

0

50,000

100,000

150,000

200,000

250,000

300,000

2007 2008 2009 2010 2011 2012 2013 2014 2015(e)

Source: AHDB, GTIS, Chinese Customs

tonn

es

OtherAustraliaNew Zealand

LJ Colby February 2016

7Profile of Chinese market

• Import market:– FTAs with Australia and New Zealand give them a competitive

advantage:• NZ no import tariffs from 2016; Australia by 2024• Otherwise tariffs 13-23%

– Tightening up of grey trade (via Hong Kong, Vietnam)– Market access the key for EU

• Demand situation:– Strong growth for lower valued cuts (flank/breast for hot pots):

• Could even be shortages if further demand growth– Growth potential though also for premium cuts

• Future demand growth to exceed domestic supply increase?:

• Importance of Government policy though

LJ Colby February 2016

8

Hot pot:

LJ Colby February 2016

9Large markets for EU live culled sheep (but not lambs):

- Dominated by North Africa/Near East - Good markets for Romanian and Spanish culled ewes- Geographical proximity, limited competition (less from Syria, Australia) - But political/economic, disease uncertainties

EU live sheep exports by region/country, 2007-15

0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

1,750,000

2,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015(e)

Source: AHDB, GTIS, Eurostat

head

OtherOther Mid.East/N. AfricaTurkey

JordanLibya

LJ Colby February 2016

10Steady progress with EU sheep meat offal exports:- Led by “Chinese” market (but total market much smaller than for meat) - But also Other Africa (Cote d’Ivoire, Ghana)- Dominated by Ireland plus smaller volumes Netherlands, Spain, UK

EU sheep meat offal exports by region, 2007-15

0

1,000

2,000

3,000

4,000

5,000

6,000

2007 2008 2009 2010 2011 2012 2013 2014 2015(e)

Source: AHDB, GTIS, Eurostat

tonn

es

OtherMiddle East/North AfricaOther AfricaH/K, China, Vietnam

LJ Colby February 2016

11Competitive position of global exporters

• Australia/New Zealand dominate sheep meat trade:– Two thirds of global total (including intra-EU trade):

• Very strong in Middle East, Other Asia, North America – Next largest exporters all in EU (UK, Ireland, Spain)– Global export trade very concentrated– FTAs already benefit much of NZ/Australian trade

• EU now largest live sheep exporter • Long term future trade outlook:

– Australia: further growth for lamb (ongoing switch to meat breeds)– New Zealand: lamb production/exports to decline

• Competition from dairying, environmental legislation– Leaves room for EU exports but price disadvantage?

• Scope for demand growth:– Led by China although still some uncertainty about outlook– With North Africa/Middle East other main growth market

LJ Colby February 2016

12Issues for EU

• Long term supply availability?:– Future production at best a stability – EU to remain net importer although still scope for export development:

• Helps maximise carcase valuation• Exports worth €310 million in 2014 (including live €201 million)

• Market access:– Need to penetrate Gulf States especially Saudi Arabia and UAE– North American markets: need to implement CETA (with Canada) and

TTIP (with United States):• Large importers with growing immigrant population

– Such markets offer opportunities for premium lamb– … plus China– Cuisines becoming more international – Even with FTAs: safeguards? EU-Morocco Association Agreement:

• Carcase imports from EU 140% import tariff still applies!

LJ Colby February 2016

13To summarise: EU export competitive position• Supply availability:

– Wide range of products• Light/heavy lambs• Range of cuts including a surplus of low valued ones• Different production seasonality (within EU and NZ/Aust.)• Halal slaughter (including non-stun)

– But EU high cost producer vis a vis Australia/New Zealand• Demand situation:

– Large Moslim population in proximity to EU:• North Africa, Near East (taking live and meat); good transport links

– Need access to Chinese market– Scope for increased trade to Western industrialised economies:

• But requires marketing effort • Market access issues:

• Animal health/sanitation approval• Import tariff rates: need for more FTAs

LJ Colby February 2016

14Do you want to know more about the global sheep meat market?

• Go to:– http://beefandlamb.ahdb.org.uk/market-intelligence-news/positive-long-

term-prospects-for-uk-and-global-sheep-meat-exports/

– A joint AHDB Beef and Lamb and International Meat Secretariat report “World Sheep Meat Market to 2025”

• Do not under-estimate the difficulties of the EU increasing its penetration on the global market

• Thank you for your attention