Post Brexit Reflections From The Meat Processing Sector April 2021
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Post Brexit Reflections
From The Meat
Processing Sector
April 2021Scottish exports estimated to have fallen
sharply in early 2021
Estimated sales of Scottish red meat exporters to EU customers in early 2021
Estimated value of
Estimated level of Estimated level of
beef and lamb Estimated reduction
exports in 2021 beef and lamb
exports in same in export revenue in
Month relative to the same export revenue in
month of 2020 2021
month of 2020 2021
(QMS Export (QMS)
(SAMW) (QMS)
Survey; HMRC)
January £5.7m 25% £1.4m £4.3m
February £4.8m 40% £1.9m £2.9m
Source: QMS calculations
Calculations based on: annual export survey results for exports to the EU in 2019/20, HMRC UK
export data for beef and lamb to estimate monthly Scottish exports in 2020, and SAMW surveys of
members for January and February 2021 trade levelsTrade within Europe more challenging, and there will be a permanent effect unless protocols change Additional paperwork and customs checks raise transaction costs GB exports face EU border controls and trade restrictions (fresh mince and meat preparations) 100% of consignments face document and identity checks, with 15% physically checked Traders and hauliers nervous about shipping mixed loads of products from different processing sites due to higher risk of delay and rejection EU meat imported to GB to require EHCs from October (delayed six months) EU meat to enter GB via BCP from Jan 1st 2022, with ‘at least 1%’ of consignments to be physically checked (delayed) Zero tariffs, provided rules of origin (ROO) are met Originating status more complex when cross-border supply chains involved
Despite reduced export activity, farmgate
beef and lamb prices at record levels
Average steer price at Scottish abattoirs Average SQQ lamb price at Scottish
440 auctions
330
420
310
290
400
270
p/kg dwt
p/kg lwt
380 250
230
360
210
190
340
170
320 150
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2016-20 2020 2021 2016-20 2020 2021
Source: AHDB; QMS calculations Source: IAAS/ScotEID; QMS
calculationsBeef: UK exports and imports reduced by the pandemic
and EU Exit, with early stockbuilding in December 2020
UK beef exports – product weight UK beef imports – product weight
30000 30000
25000 25000
20000 20000
Tonnes
Tonnes
15000 15000
10000 10000
5000 5000
0 0
J F M A M J J A S O N D J F M A M J J A S O N D
2016-20 2019 2020 2021 2016-20 2019 2020 2021
Source: HMRC; QMS calculations
Data covers HS codes 0201, 0202 (fresh and frozen beef)Beef: exports to the EU rebounded partially in February but
remained low while non-EU volumes remained well above
their five-year average
UK beef exports to the EU – product weight UK beef exports to non-EU – product weight
12000 12000
10000 10000
8000 8000
Tonnes
Tonnes
6000 6000
4000 4000
2000 2000
0 0
J F M A M J J A S O N D J F M A M J J A S O N D
2016-20 2019 2020 2021 2016-20 2019 2020 2021
Source: HMRC; QMS calculations
Data covers HS codes 0201, 0202 (fresh and frozen beef)UK Beef production falling, constraining the
volume available for export
Year-on-year change in UK beef output Cumulative change in UK beef output
6.0 since October 2020
0.0
4.0
-2.0
2.0
Thousand tonnes
Thousand tonnes
-4.0
0.0
-6.0
-2.0
-8.0
-4.0
-10.0
-6.0
-12.0
-8.0 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21
Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21
Source: Defra slaughter data; QMS calculationsLamb: UK exports reduced by the pandemic and EU Exit,
with early stockbuilding in December 2020. Import
reduction also reflects rebalancing of NZ to China
UK sheepmeat exports – product weight UK sheepmeat imports – product weight
12000 12000
10000 10000
8000 8000
Tonnes
Tonnes
6000 6000
4000 4000
2000 2000
0 0
J F M A M J J A S O N D J F M A M J J A S O N D
2016-20 2019 2020 2021 2016-20 2019 2020 2021
Source: HMRC; QMS calculations
Data covers HS code 0204 (fresh and frozen sheep and goatmeat)Lamb: exports to the EU rebounded partially in February but
remained low while non-EU volumes remained well above
their five-year average but at a very low base level
UK sheepmeat exports to the EU – product UK sheepmeat exports to non-EU – product
weight weight
12000 12000
10000 10000
8000 8000
Tonnes
Tonnes
6000 6000
4000 4000
2000 2000
0 0
J F M A M J J A S O N D J F M A M J J A S O N D
2016-20 2019 2020 2021 2016-20 2019 2020 2021
Source: HMRC; QMS calculations
Data covers HS code 0204 (fresh and frozen sheep and goatmeat)UK sheepmeat production falling, constraining the
volume available for export
Year-on-year change in UK sheepmeat Cumulative change in UK sheepmeat
output output since October 2020
0.0 0.0
-1.0
-1.0
-2.0
-3.0
Thousand tonnes
-2.0
Thousand tonnes
-4.0
-3.0 -5.0
-6.0
-4.0 -7.0
-8.0
-5.0
-9.0
-10.0
-6.0 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21
Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21
Source: Defra slaughter data; QMS calculationsUK sheepmeat production falling, constraining the
volume available for export, especially for mutton
Year-on-year change in UK sheepmeat output
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
-35%
-40%
Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21
Lamb Mutton
Source: Defra slaughter data; QMS calculationsLimited margin for lamb exporters, before factoring in higher
transaction costs, especially from late February to late March
Comparison of farmgate and export carcase price in 2021
9.50
9.00
8.50
€/kg carcase weight
8.00
7.50
7.00
Week 16 (ending April 24) GB dwt estimated
6.50 based on change in GB auction prices and
exchange rate from the previous week
6.00
5.50
5.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Wholesale price at Rungis market in Paris for imported 16-22kg R grade carcases GB deadweight lamb price
Source: Wholesale prices are a weekly average of daily prices reported by FranceAgriMer;
GB deadweight from AHDB; weekly average exchange rate based on daily rate published by
ECB; QMS calculationsIn contrast to beef and lamb, the pig sector faced a very
challenging winter; though prices have been close to their
five-year average
GB Standard Pig Price
170
165
160
155
150
p/kg dwt
145
140
135
130
125
120
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2016-20 2020 2021
Source: AHDB; QMS calculationsUK pigmeat production has been volatile due to outages at
processing sites but has risen overall due to heavier weights,
leaving more product available for export
Year-on-year change in UK pigmeat Cumulative change in UK pigmeat
output output since October 2020
15.0 25.0
20.0
10.0
Thousand tonnes
15.0
Thousand tonnes
5.0
10.0
0.0
5.0
-5.0 0.0
-5.0
-10.0 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21
Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21
Source: Defra slaughter data; QMS calculationsUK pork trade rebalancing towards China has
accelerated after single market exit
30000
All countries 2020
+6.3% y/y
25000 China + HK
+44.2% y/y
20000
Tonnes
China +HK
15000
2020 share 48.7%
China +HK
2019 share 35.8%
10000 China +HK
China +HK China +HK
2018 share 22.5%
2016 share 24.9% 2017 share 24.4%
5000 China +HK
Jan 2021 share 56.2%
Feb 2021 share 63.6%
0
2016 2017 2018 2019 2020 2021
All China + HK Linear (All) Linear (China + HK)
Source: HMRC; QMS calculations
Data covers HS code 0203Trade in early 2021 – a summary
1. Exports to the EU and imports to the UK have fallen sharply in 2021, following the change in trade rules
2. Some of the reduction reflects increased trade in December 2020, with firms looking to build stocks early in
case of problems, plus volatility in domestic production and uncompetitive farmgate prices
3. Some of the reduction reflects reduced catering sector demand, which is more likely to be price sensitive
and less likely to be provenance-driven than retail meat demand, but trade has fallen well below 2020-lows
4. Exports to the EU unlikely to recover fully due to higher transaction costs (including transport) and risk; plus
prohibitions on some types of product (including fresh mince); and rules of origin impact on supply chains
5. Trade with non-EU countries in beef and lamb starting from a very low base (market access barriers)
6. Simplification of trade and challenges for small exporters is a long-term one, unless protocols change
(this would require the politics to change)
9. Import checks pushed back to 2022 and level of checks likely to be much lower at GB border
8. than at the EU border – ‘at least 1%’ vs 15%
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