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Will buyers race to the bottom on beef?

A trade deal with Australia grants market access to foods produced to lower standards. Will foodservice businesses be first in the queue? Nick Hughes reports. 

“The biggest missing piece was the protection of our standards in trade deals.” That was the verdict of Henry Dimbleby on the government’s recent food strategy whitepaper, which adopted some of the recommendations from Dimbleby’s own independent strategy but rejected a number of others, including on trade.  

Dimbleby had wanted the government to define minimum standards for future trade deals in areas such as the environment and animal welfare, a call supported by the climate change committee and the trade and agriculture commission (TAC), the independent body established by the government to scrutinise and advise on trade deals.

In the event, the lines on trade in the food strategy were dismissed as “so weak that they are virtually meaningless” by Sustain, the alliance for food and farming.

The environment, food and rural affairs (EFRA) committee of MPs has since weighed into the debate by labelling the government’s decision not to require Australian food imports to meet core UK standards as “regrettable” under the terms of a new free trade agreement (FTA).

Amid reports of school caterers switching to imported meats to cope with cost price inflation, and with analysis showing that most Australian food imports, including animal products like beef, will be destined for the foodservice sector, should we be concerned about standards being compromised in the hunt for cheaper food?

New deals

On June 16th the government laid the UK-Australia FTA before parliament. It marked the first ‘new’ trade deal negotiated since the UK left the EU (a number of pre-existing EU deals have been rolled over) and will remove tariffs on a wide range of imports from Australia, including beef and sheep meat, sugar and wine.

The government estimates the FTA will boost the UK economy by £2.3bn, or 0.08% of GDP, by 2035, but some sectors will see a negative impact including food and agriculture which will lose out to the tune of £278m.

In June, the EFRA committee published the result of its inquiry into the food and agriculture elements of the Australia FTA. It highlighted some positive features of the deal including a non-regression obligation on environmental regulations and standards, a continued ban on imports of hormone-treated beef and the exclusion of pig and poultry from tariff liberalisation reflecting both concerns over animal welfare and low volumes of current trade in these meats.

It also applauded a chapter dedicated to animal welfare – a first for an Australian FTA – which contains a high-level commitment that neither party will lower its animal welfare standards. The text does not, however, require either party to make any changes to existing animal welfare practices. Instead, both parties will “endeavour” to improve their animal welfare performance and agree to enforce existing animal welfare laws and not weaken them.

MPs also cited concerns raised by the TAC that the agreement would lead to increased imports of Australian products made at lower costs due to the use of pesticides that are banned in the UK; and that it might also lead to an increase in imports of lower-cost Australian grown genetically-modified canola (rapeseed).

Red meat market?

Where red meat is concerned, the committee heard from some witnesses that there is unlikely to be a significant, immediate impact on UK cattle and sheep farmers because Australia has more profitable markets closer to home. It also heard evidence that food produced to lower standards in areas like animal welfare is unlikely to enter the UK in any great volume due to market dynamics – for example the practice of ‘hot branding’ where a hot iron is used to make a permanent identification mark on the skin on an animal is largely done to a breed of Australian cattle for which there an insignificant market in the UK.

Still, the TAC concluded in its own review of the Australia deal that it is inevitable more beef produced intensively in feedlots will enter the UK under the FTA and there is a risk that imported products, including beef, will be linked to deforestation. Australian beef also comes with a higher greenhouse gas footprint than UK beef, according to research published in 2020.

Analysis from the Agriculture and Horticulture Development Board (AHDB) predicts a large percentage increase in Australian beef imports to the UK following the trade deal, albeit from a small base. It says the likelihood is that this will mostly compete in the UK foodservice market, as will likely be the case for most other food imports. 

The great unknown is to what extent out-of-home operators will be prepared to source antipodean product? In her evidence to the EFRA committee, UKHospitality chief executive Kate Nicholls suggested there was unlikely to be a significant spike in demand from businesses who are increasingly focused on values such as quality, authenticity and traceability.

Nicholls noted that the sector’s biggest Australian import is currently wine for which the tariff removal would be “helpful because it is sold a lot”. (The deal is also thought to be helpful to the labour market by allowing young people to have working holidays.) But on the question of beef imports Nicholls was unconvinced by the scale of the impact. “The majority of the beef sold in the UK, as well as the lamb, will be British and Irish,” she told MPs. “[Imported beef] is a very small proportion of the amount of the total market.”

This may be true at a total market level, however Footprint analysis from 2020 showed that some caterers source as much as 55% of their beef from overseas markets including from Australia. With sector survey data from June showing that just 37% of UK hospitality businesses are currently turning a profit the temptation to source cheaper product from overseas may be hard to resist. Indeed, a recent survey from Laca, the school caterers’ association for England and Wales, found that almost 30% of caterers are considering switching from British meat to meat from abroad, with 20% already having done so.

Australian beef “may well substitute for other long-haul markets such as Argentina”, according to Nicholls but she said there was unlikely to be a big increase in imports in the short-term. “We are moving as a nation towards a higher standard of food,” she said, adding that “we want to focus and prioritise quality, not quantity, in a hospitality setting too”.

Precedent over principle

Perhaps fears of an influx of lower standard products, such as beef, are indeed overblown. However, more so than the agreement itself, the EFRA committee noted how groups such as the National Farmers Union consider the precedent of the Australian deal to be more dangerous than the principle.

Campaign groups have highlighted how countries such as India, with which the UK aims to conclude the majority of negotiations for an FTA in the autumn, have weaker rules in areas such as the use of pesticides and antibiotics. Canada, meanwhile, plans to make the case for the UK to accept imports of hormone-treated beef with “vigour and conviction,” according to media reports.

The EFRA committee restated its recommendation for the government to publish core standards as it warned how other major agricultural exporting nations might seek to use the existence of the Australia deal to gain similar access for their goods.

Those calls have so far fallen on deaf ears and it seems inevitable that under the UK’s new trade regime access to food produced to lower standards will increase for those that want to source it.

It remains to be seen whether foodservice operators will be first in the queue.