EXPORT UPDATE J.P. Garnier 12 th Meat Export Conference 29 June 2016, Hilton Warwick
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EXPORT UPDATE
J.P. Garnier
12th Meat Export Conference
29 June 2016, Hilton Warwick
Well done Cranswick, Meat Exporter of the Year!
7 days later…
The big picture
Pork, beef, lamb: what’s happening?
Country activities
AGENDA
Seven days later…
70.0%
30.0%
EU Third Countries
Pork: 32% of production
92.5%
7.5%
EU Third Countries
Beef: 18% of production
96.4%
3.4%
EU Third Countries
Lamb and mutton: 37% of production
British livestock and meat
production remain highly
dependent of EU markets…
particularly sheep meat.
Exports in value (2015) and expected share of production to be exported in 2016 (from HMRC data and forecasts)
Seven days later…
Where next for British exports of meat
and dairy products?*
*Expected to be worth £ 3.6 billion in 2016
We must ensure that livestock products are high on the agenda in
future EU and FTA negotiations and not sacrificed in the
bargaining.
Adequate resources must be provided from Government regarding
negotiations on SPS, tariffs, non-tariff barriers and renegotiations
of Export Health Certificates. AHDB has expertise on this field and
is ready to support Government efforts on this field.
New export food marketing policy and support are needed from
Government to relieve market difficulties likely to arise.
Full economic and policy implications must be evaluated.
Examples of tariffs:- Norway lamb carcases: 429% duty- Norway boneless lamb: £ 6.36 /kg- Norway beef fillet: 344%- Thailand UK beef: 50%- Barbados / Caricom beef: 30%
“Researchers have estimated that non-tariff barriers such as product standards and rules of origin add roughly as much as tariffs themselves to the cost of conducting trade”.Sam Ashworth-Hayes, June 2016 See Kee et al., Economic Journal 2009
Seven days later…
Importance of FTAs
The big picture
Deflationary pressure is still affecting the EU and World’s
beef, pork and poultry markets.
The price of fifth quarter products is still very low,
particularly for sheep skins.
Access issues to Mainland China are being resolved.
The difference of price between Irish and British beef has
reduced.
Key factors
Stabilisation around € 1.18 / £ ?US$ falls from £ 1.72 in August 2014 to £ 1.31 on 27/06/2016
Major currency swings
£ / € EXCHANGE RATE
Source: Yahoo finance
2008-9 Financial crisis
2014-15 Greek crisis
Brexit
£ 1.20 on 27/06
800
1,032
1,464 1,520
1,7371,907
2,324 2,2522,339 2,358
2,114
2,435
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016(f)
The big picture
UK exports of livestock products 2005-16 (£ m)
Impact of Sterling, China access and low commodity prices
Exporters: to do list
We market
an
expensive
product
Eating experience and consistency
Presentation, packaging, outer
Service, service, service
Prospection and trade support
‘Story’ and promotional support
Resource
allocation
Developing a service culture
British pork exports
British pork exports
Good progress: USA, India, the Philippines
0
50
100
150
200
250
300
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
(f)
UK carcase meat exports 1985-2016(f)
(000s tonnes)
Adapted from Defra data
In 2016, when
including processed
pork products and
live equivalent,
exports will account
for a record 32% of
UK production, worth
£ 390 million.
Pork exports are doing well
Chart: UK pork exportsSource: HMRC
10
11
12
13
14
15
16
17
18
19
20
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
00
0 t
on
ne
s
2014 2015 2016
Pig meat2015 year – 187,000 tonnes +3%2016 ytd – 71.350 tonnes +18%
Offal2015 year – 59,000 tonnes +30%2016 ytd – 26,800 tonnes +101%
Pork exports are doing well
Sou
rce:
IFIP
, USM
EF
Live weight prices in China
Pork balance sheet
12%17%
26%22%23%
30%29%31%31%32%40%
China’s share of world trade
All about China?
Falling production in China (7.9% in 2016?)
→ need to import.
High domestic prices → attractive export
margins.
EU exporters are doing well and working to
capacity. A UK exporter: “We are riding the
Chinese wave”.
Positive situation to carry well into 2017.
An unprecedented situation
New consumer study
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
EU markets
Non EU markets
We are still dependent of EU markets
Pork exports 2005-2015 (tonnes)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
EU markets
Non EU markets
We depend less on the EU for offal
Pig offal exports 2005-2015 (tonnes)
Growing, unsatisfied demand.
Already, some successes: USA, Australia, EU
Other potential USPs such as sustainability
High margins
High welfare, antibiotics-free pork
A massive opportunity for British pork
British pork in Albert Heijn
Antibiotics-free High welfare Organic Breed specific UK presence
The Netherlands X X X X (high welfare)
Sweden X X X X X (high welfare)
Germany X X X X X (organic)
Australia X X X (high welfare)
Japan X X X X (high welfare)
China X X X
USA X X X X (antibiotics-f)
China, India, Japan, Korea…
Korea Internet food sales will increase from 3 to 11% of total food retail sales
between 2016 and 2020.
13% of all Chinese retail sales already take place over the Internet –
platforms dominate.
99% of Chinese in tier 1-3 cities use smartphones. Internet penetration is
still only 51% in China.
>90% of Indian Internet buyers buy food using a smartphone, 55% for the
Chinese.
Waitrose and Sainsbury now sell food by e-commerce in China.
New Zealand seafood is now available in rural China.
L’Occitane sold 10,000 hand lotion bottles in 15 minutes on Black Friday.
We are developing a project in Korea.
Internet retailing is booming in Asia
Adding value: e-commerce
Norway
Spain
Russia
Adding value: boil in bag / sous-vide
Marketing British Pork
India mission, April 2016
SIAL, May 2016
Promotion May
CitySuper,
Hong Kong
Targets China, Japan, India, Vietnam
and Australia
To start 1 January 2017
Worth € 1.95m over three years
Under specific chapter for EU pork
promotion
Approval in October 2016
An innovative and high quality proposal
EU co-founded promotion project
British beef exports
Rebound of exports
2007 2008 2009 2010 2011 2012 2013 2014 2015
58,692
81,350 83,412
110,120
143,647
119,624
105,311112,055110,488
Beef exports by destination, 2007-15 (tonnes)
Exports for the period 2013-15 were hit by a combination of high
prices and high currency
So far this year, beef exports are up 18.5% and further progress
should continue.
But deflationary environment
Traditional markets still dominate
36.6%
22.1%
10.0%
6.1%
4.0%
2.8%
2.5%
1.8%
1.8%
1.6%1.6%
1.5%1.2%
1.0% 5.5%
Ireland
Netherlands
France
Italy
Belgium
Germany
Hong Kong
Poland
Sweden
Spain
Denmark
Philippines
Greece
Portugal
Others
Beef exports by destination, 2015 (%)
Fresh chilled boneless cuts
46%Fresh chilled
carcase42%
Fresh chilled bone in cuts
12%
2010
Fresh chilled
boneless cuts70%
Fresh chilled carcase
18%
Fresh chilled bone in
cuts12%
2015
Carcases £ 1,800 /tonne – Cuts £ 4,500 /tonneCarcase exports to the Netherlands were down 64% in 2015
Changing beef exports
Beef exports by type, 2015 (%)
In the old days, we use to have a list of steaks with one burger on the menu, nowadays, we have a list of burgers with one steak.
The premium burger story
Made with Irish beef in Spain
and sold in Germany
Belgium – Delhaize
launch 2015
Spain – Portugal
Hamburger shop
Are we missing a trick?
A premium beef story
Are we missing a trick?
Only five years ago, Spain was not on the
gastronomic map for premium beef…
Enter the Rubia Gallega
Small breed (29,000 cows) but cows can be
finished to 5H standard and the meat matured on
the bone for 40 days+
Consistent high eating high experience means
that Rubia Gallega steaks feature on the menus
of the best steak restaurants worldwide…
…and get a great price.
Other example of
premium beef:
Chianina (Italy, retail)
A premium English beef story
We need to step up our efforts to promote English beef as a premium
product able to compete against the best.
We are proposing to create a small guild of premium beef processors.
We will create new (overarching) branding and new high quality
marketing material for premium English beef with consistent high eating
experience.
Development of USPs and story [The UK was in 2015 the number 1
country for Soft Power according to Portland 30 ranking]
We will be targeting mainly food service in premium markets e.g.
Germany, Scandinavia, The Netherlands, Hong Kong…
Potential launch in the autumn according to market conditions.
A new initiative
British lamb exports
0
50
100
150
200
250
300
350
400
450
Exports Production
40.3%
36.9%
A positive evolution
Sheep meat exports 1980-2016f (000s tonnes)
Production data: Defra, Exports 1980-2007 HMRC, 2008-15 estimates
A positive evolution
Sheep meat exports by destination (%)
Estimates
44%
13%
10%
8%
8%
7%
5%5%
France
Germany
Belgium
Ireland
Hong Kong
Italy
Netherlands
Others
Sheep meat exports
Fall of exports in 2015 in Hong Kong, France, and Norway.
Low price competition from Spain in Southern France and Italy.
Low value of ovine fifth quarter.
Marked deterioration of HMRC data in 2015. Also issue of
“disappearance” and cut coefficients.
The not so good
The much better
Progress in market penetration in Europe and relations with major
European retailers.
More cut sales and value added.
European demand (with the exception of France, Spain and Greece) is
generally good.
End of overvaluation of Sterling.
Sheep meat exports
The EU lamb promotion project
The three-year € 6m project ends at
the end of 2017.
Satisfactory developments in Fr, Ge,
Dk, Be, Ir and the UK.
Follow-project now unclear and will
depend on the terms of the new EU-
UK arrangements.
Press lamb promotion in Hamburg, June 2016
Sheep meat exports
The skin pack phenomenon
Important to increase shelf-life and
reduce drip for meats with low turnover
such as lamb.
Vertical presentation optimises space
and increases sales.
More marketing possibilities and
sophistication.
Now, retail skin packing of lamb in Italy,
France, Germany, the Netherlands and
Belgium (+UK).
1/6 second/package
average time spent
looking at packaging*
Origin Green is a strong brand.However, Ireland’s challenge is, it has the worst greenhouse gas emission from agriculture in the European Union. [The UK comes 12th]
Our competitors
A level playing field is necessary.Irish sheep farmers are benefiting from a € 25 million package. In addition, some € 25 million subsidies has been allocated to disadvantaged areas.
Perspectives
We are entering a period of about three years of rough
seas and uncertainty for the British meat trade.
But our core strengths and USPs in lamb, pork and
beef production remain intact.
The long terms perspectives are highly favourable if we
manage well the transition to a new constructive trading
agreement with the EU.
IT’S ALL ABOUT
OUTCOME!
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