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Sheepmeat Council : Sheepmeat 2015 2016
SHEEPMEAT COUNCIL OF AUSTRALIA ANNUAL MUSTER 2015-16 27 MARKETING, MARKET ACCESS & TRADE TRADE, MARKET ACCESS AND MARKETING at encouraging closer ties with the European Union (EU) with the Australian red meat industry preparing submissions to the Australian Government on the value of an enhanced bilateral trade partnership. Australia’s current sheepmeat access to the EU is via a country-specific 19,186 tonne quota (0% in-quota duty), with above quota tariffs amounting to 12.8% plus up to €3/kg. In November, the Australian Prime Minister, the European Commission President and the President of the European Council announced that Australia and the EU would begin procedures to secure a closer partnership – the precursor to launching formal free trade agreement negotiations between the parties. This commitment will see the EU undertake an impact assessment on the merits of an FTA with Australia, while both parties will also complete a scoping exercise and define the overall approach to potential negotiations. Provided these two processes bring a positive result, the European Commission will subsequently be in a position to request a mandate from its 28 member states and thereby commence FTA negotiations with Australia. Advocacy for the commencement of bilateral negotiations with the EU will be a priority focus for SCA (and the Australian red meat industry in general) on the trade front throughout 2016. Non-tariff barriers Of note during 2015 was AMPC’s appointment of a Trade Director, Technical Market Access to assist industry tackle the plethora of non-tariff barriers impacting Australia’s red meat trade. The initial focus of the Trade Director is on China and the Middle East – two important sheepmeat export regions identified in industry’s research as having impediments which generate significant trade distorting impacts. China China is a very important market for Australian lamb, mutton and offal and a critical market for sheepskins – 90% of Australian sheepskins are destined for China. It is a competitive market with a huge domestic industry and imports from New Zealand and other sheep producing countries. Due to the recently signed ChAFTA Australia’s tariffs are now being reduced but New Zealand is tariff free from 1 January 2016. Currently the market takes predominantly frozen breast and flap that is used in hotpot cuisine however further opportunities may exist through higher value sectors. There are issues in this market, predominantly no access for chilled product and no protocols to export tripe but also export establishments must be specifically approved by Chinese authorities for the export of chilled meat and meat products and not all Australian export establishments have been granted access to China. China has a growing middle class (66% of the world’s middle class is expected to live in China by 2030). Primarily due to its large domestic sheep industry, unlike most other Asian nations, the Chinese are familiar with sheepmeat and actively seek it out. This, accompanied by a desire for high quality, safe food and the ability to pay, offers considerable opportunity to the Australian sheepmeat industry. Convenience in shopping is a rising trend in China. It is estimated that 12% of total retail sales in 2015 were e-commerce, especially for grocery and food. It is expected that the number of online shoppers will continue to increase, with at least half of internet-connected consumers buying groceries online. High use of social media also offers an opportunity to influence consumer choices and increase brand recognition in this market. In recognition of the importance of this market to the Australian sheepmeat industry, SCA representatives were invited on several government delegations to China. These delegations involve accompanying the minister (Trade or Agriculture) and being available to brief the minister on industry issues when required along with representatives from other sectors. It is also an opportunity for SCA representatives to gain an in-depth understanding of the in-market issues which is invaluable when important policies for these markets need to be developed. SCA CEO Dr Kat Giles, supported by MLA, also travelled to China when the critical FTA discussions were held to ensure that sheepmeat remained a priority in the discussions. With a current population of 1.4 billion China is a huge and complex market full of opportunities and challenges. Now the ChAFTA has concluded and entry into force is secured the Australian sheepmeat industry is getting closer to having a competitive opportunity to capitalise on this market into the future. SCA, in conjunction with MLA, has a direct interface with the Trade Director and will have an ongoing role in assisting industry to implement strategies designed to maintain and improve technical market access by addressing specific non-tariff barriers. Marketing & Promotion MLA is responsible for developing