26 Aug 2023
Sheep Meat Trade between the UK and Australia: Current State and Future Outlook
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The UK and Australia signed a Free Trade Agreement (FTA) on June 15, 2021, that allows for the free trade of various goods, including sheep meat. The FTA permits sheep meat to be traded without tariffs between the two countries, making it easier for UK consumers to enjoy Australian lamb. This article provides an update on the current state and future outlook of sheep meat trade between the UK and Australia.
As part of the FTA, a Tariff-Rate Quota (TRQ) was introduced to allow for an allocated volume of sheep meat to be shipped from Australia to the UK. The allocated quota is determined based on the size of the company and the volumes they have previously imported. It increases every year and enables more companies to benefit from the FTA’s reduced tariffs.
As of August 16, 2023, 1,870 tonnes of sheep meat have been shipped from Australia to the UK under the TRQ since the end of May. This equates to 13% of the total TRQ volume, highlighting the popularity of Australian sheep meat among UK consumers. Additionally, in June 2023, the UK imported 830 tonnes of fresh and frozen sheep meat from Australia, which is similar to the volumes recorded in April and May.
The Australian sheep flock has hit record levels in 2023, with a reported 68.5 million sheep in the country. This has led to an increase in production, and experts predict this trend to continue through to 2024. As a result, Australian sheep meat producers will have more supply to meet the demand from the UK market, leading to potential growth in sheep meat trade.
The FTA between the UK and Australia has allowed for sheep meat to be traded without tariffs, making it more accessible for UK consumers. The introduction of the TRQ ensures that sheep meat trade remains manageable, and companies can import the volume they require. The future outlook of sheep meat trade between the two countries appears bright, with increased supply and demand predicted.
The Australian sheep industry is thriving with their sheep flock set to reach a record-breaking 78.75m head in 2023. Thanks to favourable weather conditions and improved genetics, carcase weights have increased along with the number of sheep. As a result, lamb production is expected to reach 540,000 tonnes this year with further growth anticipated in 2024 if conditions remain favourable.
This growth presents a golden opportunity for Australian exporters to expand their market share. With a declining New Zealand flock and increased reliance on China, Australia can fill the gap and explore new markets such as the US and continental Europe. Although Australia has a significant share of the US market, they have limited exports to the EU compared to New Zealand. However, with New Zealand facing increased competition from Australia in the long term, this could change.
For the UK, this news means that as we continue our free trade agreement with Australia, we need to keep an eye on the volume of products coming in. While we remain a key export destination for New Zealand, the increase in Australian production is not expected to significantly raise import levels. Instead, it’s more likely that some UK imports from other suppliers will be displaced.
Of course, this is assuming Chinese-Australian trade relationships remain stable, which may not be the case in the future. If trade flows are disrupted, Australian sheep meat may need to find a new home on the global market, which could have implications for both exporters and importers.
For more information about the UK-Australia Free Trade Agreement, please visit [FTA].
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