UK sees evolution for red meat exports

In November last year, the government announced with great fanfare that Russia had finally lifted its 16-year ban on UK beef and lamb, which was imposed in 1996 following the bovine spongiform encephalopathy (BSE) crisis. At the time, Defra predicted the deal could be worth £80m to the British meat industry in the first three years, with beef exports expected to start in January and lamb exports to follow in April.

However, things did not move as quickly as hoped. Export manager for UK red meat levy body Eblex, Jean-Pierre Garnier, told Globalmeatnews.com in May that only two abattoirs/cutting plants had been approved for export by Russian veterinary watchdog Rosselkhoznadzor, with no cold stores approved yet. He added that Russia was also refusing to approve imports of offal or bone-in lamb from the UK, issues that had not been made clear when the initial deal was struck.

After a desperate call from Eblex, the government sent the UK’s chief veterinary officer (CVO) Nigel Gibbens on a high-level mission to Russia to discuss the issues restricting market access and, in September, the UK Department for Environment, Food and Rural Affairs (Defra) announced that an export deal had been struck. The deal reportedly included an agreement for UK meat processor ABP Dorset in Yetminster to supply lamb worth £7m to a Russian distributor, with more UK plants expected to gain approval for export of beef and lamb to Russia in the coming months. Crucially, it also included an agreement to allow beef offal exports from the UK, with a £2m contract for beef offal allegedly under discussion.

It remains to be seen whether Russia will become a major trading partner for the UK, although Defra has predicted the market could be worth £100m over the next three years. Garnier says that Russia is an important market for UK exporters because it has a deficit in beef and sheepmeat, and some of the highest domestic meat prices in the world, due to its need to attract investment and rebuild production capacity.

China success​

In contrast, China, which opened its market to UK pork for the first time in May 2012, has already become the largest export market for UK pork. China, including Hong Kong, accounted for 20% of UK pork exports in 2012, putting it in close second place to Germany. However, exports to China and Hong Kong jumped by 65% year-on-year in January-February 2013, and it now accounts for nearly a quarter of total exports.

“Exports to China have grown massively for us since we got direct access last year and access to Hong Kong for offal,”​ explains Eblex export marketing executive Jonathan Eckley. “We have seen really strong growth there, especially in the first four months of this year.”​

The road has not been totally smooth for exporters, and Eckley admits there have been some challenges around certification, but adds that the industry and Eblex are “working hard to try and resolve these”.​

China’s breeding herd increased 3% last year and 2013 slaughterings are expected to reach 705m, which is 16m higher than 2012. “People say that might dampen the import market, which has obviously been key to us over the last 12  months,” says Eckley. “But from an EU perspective and a UK perspective, we have grown imports there, as imports to China from other countries like the US have declined, so it remains a strong market for us.”

One factor behind the success of UK pork in China has been the phenomenal demand for sausages, particularly in Hong Kong. “Hong Kong is a premium market and sausage growth was massive last year,” says Eckley. Demand from China helped to boost total UK sausage exports by 51.53% year-on-year in 2012 to 9,702t, and exports for the first four months of the year are already up 11.31%.

Charles Baughan, owner of premium sausage exporter Westaways Sausages, says that Hong Kong is now the company’s biggest market, and it is not just expatriates who are driving demand. “The price of pork in mainland China is such that domestically-produced sausages are expensive, so we can compete not only on value – because our products are of high quality – but also on price.”​ Westaways began selling sausages into retail, but has now extended its reach by selling into the foodservice market.

Baughan says that while some may be surprised by the demand for British sausages from China, it is not hard to see why they are so popular. “If you look at pork as a protein it is relatively good value and there is an awful lot of pork in Asia. China is the world’s biggest pork producer and they love sausages,”​ he says, adding that British food has a strong reputation in China for quality and food safety. “If you ask an affluent family whether they would prefer local brands or UK brands, they will always choose UK brands”.​

Asia opportunities​

Although Hong Kong is Westaways’ biggest sausage market, Baughan says that the company is selling more and more product to other Asian countries, such as Singapore, Malaysia and Japan. “We believe we are the only meat company in Europe with a pork export licence into Japan,”​ he says.

Although the company has considered producing sausages with soy sauce, aimed directly at the Asian market, Baughan says Asian consumers love traditional British flavours. “Our honey pork sausages, which are a best-seller in the UK, are also our best-seller in the Far East,”​ he explains. “We do a Cumberland and a Lincoln sausage and they are equally popular.”​

China also became the second-largest export market for UK lamb in 2012, and consistently imports 1,000t per month. Beef exports to China are not performing quite so well, but Eblex recently launched a premium English beef brand in a bid to boost sales, and Garnier told delegates at the Eblex export conference that there was the possibility of three to five importers of premium English beef in the short term, with more expected to take interest as the brand develops.

He said that the push on premium beef in Hong Kong reflects the overall direction that Eblex is taking on beef exports, with a focus on premiumisation as opposed to volume. “We want to get premium steak cuts to restaurants across the world. Beef is changing; it has become a fashionable product and there has been a huge growth in the number of steakhouses round the world, and we are part of it,” he said.

He explained that the strategy on beef was primarily the result of the high prices of UK beef. “We need high prices for farmers and we have among the highest prices for beef in Europe, if not the world. But we have the right quality as well, so we have got to put the two together.”​

Other markets​

Another emerging market of note is Ghana, which is now the ninth-largest market for lamb and the eighth-largest market for beef. Last month, Eblex led a trade mission to the Ghana, Cote d’Ivoire and Benin, looking to push beef, lamb and fifth-quarter products. “These countries have great consumption of meat and there is not enough domestic production to go around, so there is good demand,”​ Garnier explains.

Eckley says Australia is potentially a strong market for UK pork, having increased pork imports by three times in the last 10 years to about 140,000t. “That is predicted to keep growing over the next two years by 7-9%, so we see that as a key market going forward,”​ he says. “We have just got market access there for pork for further processing.”​

Exports to Europe have been tempered by the economic crisis, which has hit the Italian, Spanish and Greek markets particularly hard. However, there have been some positive developments in Europe, including the recent commitment from two major retailers to switch to 100% British lamb. Belgian retailer Delhaize switched from southern hemisphere lamb to British and Irish lamb, while Carrefour in Italy agreed to source all of its lamb from England from September.

With impressive growth in emerging markets and some success in the difficult European market, 2013 is shaping up to be a good year for UK meat exports. However, Garnier believes that access to the Russian market remains crucial to maintaining growth in the future. “I don’t think we can afford not to sell meat to Russia,”​ he says.