But even if a deal can be done, what is there to get excited about?
After nearly seven years in the economic doldrums consumers in the EU are beset by a spiral of high unemployment, weak growth and a potential breaking apart of the 28-country bloc under the strain of it all.
To make matters worse Russian president Vladimir Putin’s banning of food imports from the West last September left large quantities of European beef previously destined for Russia trapped inside its domestic market and competing with what little imports make it inside the EU.
Former Beef + Lamb NZ chairman Mike Petersen, now the Government’s agricultural trade envoy isn’t concerned, however.
“I get the sense that even if we can commence negotiations this year the talks will take some time which may take us beyond the issues facing Europe today.”
A report by Rabobank on international beef markets in December said falling prices for grinding beef in Europe was because of the declining popularity of fast food restaurants.
A forecast increase in cull cows as a result of dairy production quotas being lifted in April this year was expected to add to that downward pressure.
However, the same report noted a positive price outlook for prime beef because of the still-buoyant demand for higher-end cuts and declining availability as dairy production squeezed out beef cattle farming.
‘I get the sense that even if we can commence negotiations this year the talks will take some time which may take us beyond the issues facing Europe today.’
Petersen, who met a number of farming and industry representatives on a trip through the EU late last year believed the continent had plenty of potential for NZ beef exports at the high end.
“Europe has a population over 500 million and even with the economic issues facing this region today relative wealth is high compared to many of our current trading partners.
“There are still plenty of wealthy European consumers who are prepared to pay high prices for NZ products.”
High-end beef exports to the EU from NZ are currently restricted by a 1300-tonne quota. Exports within the quota are subject to a 20% tariff and outside it 12.8%, plus an additional charge of up to €304.10 per 100kg.
This country also vies for annual international chilled and frozen beef quota equal to 116,000t, as well as 48,000t of grain-fed quota initially granted to the United States by the EU as a sop following its ban on hormone-treated cattle but which has over time been extended to others including NZ.
This “hormone-free” quota is allocated quarterly on a first-come, first-served basis and is difficult to access, Petersen said.
These high barriers have kept NZ’s beef trade with the EU at very low levels – just 10,000t worth $126m in 2014 – which the Meat Industry Association estimates cost $52m in duties.
Petersen said NZ’s negotiators will be gunning for better access to the EU market in any free-trade talks.
“An EU-NZ free-trade agreement provides us with the opportunity to differentiate our grass-fed beef from other beef as non-threatening which could go a long way to appeasing doubters in Europe.”
NZ is not the only country angling for a bigger bite of Europe’s beef markets.
Canada in August last year completed a trade agreement which when ratified will give it 50,000t of tariff-free access into the EU for chilled and frozen beef.
Beef producing superpowers in the Latin American trading bloc of Mercosur and the US are also in the process of negotiating trade agreements with the EU. Petersen said NZ’s representatives fear a quick conclusion to those negotiations could leave this country high and dry when it comes to getting improved access for beef.
“The USA is the powerhouse of agricultural production currently and its exports have been growing at an incredible pace. Again a good reason why standing still for us is not an option,” he said.
