The UK secured a Free Trade Agreement (FTA) with Australia on 14th June 2021. A final Agreement in Principle will be published in the upcoming days. According to the agreement, Australia will have immediate access to a duty-free beef quota of 35,000 tonnes, rising to 110,000 tonnes by 2031.
Australia exports beef, particularly premium steak cuts, to the EU and UK market with a tariff of 20% on beef exports. The FTA with Australia would typically mean large volumes of duty-free Australian beef entering the UK market in 2021. However, Australia is still recovering from the severe drought it faced in 2018 and 2019. This resulted in a dramatic decline in Australian beef output in 2019 and 2020, thus weighing on global beef supplies during the same period. In 2019, the UK imported 2,500-3,000 tonnes of beef from Australia, down from 7,000 tonnes in 2013 and 2014. In 2021, Australian beef exports are estimated to drop by 5% y-o-y. Also, lower beef production led to a sharp increase in Australian beef price, reducing Australian beef competitiveness globally. Mintec Australian beef price increased by 13.7% y-o-y and 3.9% m-o-m to AUD 6.7/kg on 9th June 2021.
Overall, the UK’s FTA with Australia should support a flourishing trade relationship between the two countries. However, it is unlikely to spur a dramatic increase in beef supplies on the UK market in the remainder of 2021.