Ireland’s bid for market share in Asia’s beef boom

With Asia predicted to become the export destination for half of the world’s beef in the next three to four years, it was no surprise that our beef industry was well represented on the recent Department of Agriculture/Bord Bia food trade mission to Japan and South Korea, writes Stephen Cadogan.

Rising incomes and changing cultures are dramatically increasing beef demand in Asia. Already this year, the Philippines has come to the rescue of Irish beef exporters. In the year up to August, compared to 2016, Ireland exported over 4,000 extra tonnes of beef to the Philippines, which has emerged as an important buyer for the estimated 5% increase in Irish beef production this year.

Elsewhere in Asia, China’s growing appetite for beef is expected to generate demand for 2.5 million additional tonnes between the years 2010 and 2025.

India is also experiencing exploding demand for beef.

Securing a foothold in this booming Asian beef market is one of the long term aims behind the recent Irish trade mission to Japan and South Korea. Japan already has the world’s fifth highest number of McDonald’s outlets per capita, built around the beefburger, and grilled meat restaurants are becoming very popular among young people.

Beef consumption makes up around 18% of total meat consumption in Japan.

Compared to the traditionally more fatty beef from domestic breeds like the ultra-expensive Wagyu cattle, Japanese consumers are open to imported beef, because it is cheaper, and they have health concerns about fat.

Japan and South Korea combined is one of top five markets Bord Bia is aiming at, as Brexit makes the task of finding new markets for our food ever more urgent.

The stated aim is to more than double Ireland’s current food and drink exports to Japan and South Korea, from about €100m to €250m, by 2025, and in the longer term to use these countries as launching pads for increased Irish exports across Asia.

At Bord Bia’s EU beef and lamb promotional event in Tokyo during the recent Irish food trade mission, Declan Fennell, Bord Bia, helping to serve up Irish beef to Japanese chefs. Earlier this year, Bord Bia won the contract to promote EU beef and lamb across China, Japan and Hong Kong in a campaign valued at €3.75 million.

Leading the trade mission, Agriculture Minister Michael Creed said if you can make it in Japan’s fiercely competitive food market, you can make it anywhere in Asia.

How realistic is the implied aim of Ireland becoming a bigger player in the Asia beef market, which Brazil-based beef processor Minerva SA has predicted will become the destination for 50% of the world’s beef in the next three to four years, up from just under 46% in 2017.

And why is Japan a good place to start (Ireland has beef access to the Japanese market since 2013, and the recent trade mission took us to the fourth of six stages in getting access to the South Korea market for beef).

Interestingly, Minerva and other Brazilian beef exporters will have to advance in Asia without a toehold in Japan, because their beef is banned by the world’s third largest beef importer. It is beef from New Zealand and Australia that’s on the menu in the 25 or so Brazilian steak houses in Tokyo, a city famous for its 160,000 restaurants.

Brazilian beef has been out of Japan since 2012, due to a mad cow and foot and mouth disease risks, and there’s little sign of it getting back in.

Only some processed Brazilian beef is allowed.

Banning beef from the second biggest producer in the world shows how exacting import standards are in Japan. It is still well served with competitively priced beef imports, mostly from Australia, and the US, the world’s No 1 beef producer.

Ireland became an approved beef supplier to Japan in 2013, and remarkably, Japan now takes a portion of most of the carcases of cattle aged under 30 months which are slaughtered in Ireland. This unusual situation arises because Japan is a particularly strong market for offals such as tongue and skirts, and the portion Japan takes from so many Irish carcases is the tongue. Offal (also known as the fifth quarter) is the highest-priced beef commodity imported in Japan, at about $10,000 per tonne.

What are Ireland’s other selling points for beef in Japan (which imports more beef than Ireland produces, and imports 60% of all its food in terms of calories)? In 2016, beef imports totalled 610,000 tonnes, compared to Irish production of 550,000 tonnes.

One of the selling points is the free trade agreement between the EU and Japan, scheduled to start in 2019, which will eliminate import taxes in Japan for about 90% of food and drink imports from the EU, over 15 years.

It will start with zero tariffs on EU wines, so EU exporters can hope for Japanese consumers turning to wine and steak dinners, or wine and cheese parties.

As it stands, EU cheese and beef in Japan have to carry import duties of 30-40%.

Tariffs on beef will be cut from 38.5% to 27.5%, in the first year and then gradually to 9%. By year 11 of the agreement, the 12.8% import duty on offal such as beef tongues will have fallen to zero.

Japan imported over $51 billion of food and drink in 2016. They want to diversify their import sources, and we are a good fit, says Agriculture Minister Michael Creed.

He spent much of the trade mission spelling out how high standards of safety, traceability, and sustainability make Ireland the food island where a population of 5m produces enough food for 25m.

It’s also a good time for Ireland to sell its wares in this part of the world because it was Ireland’s Bord Bia that won the three-year contract to promote EU beef and lamb in Asia (beef only in Japan).

The €3.75m contract came at an opportune time, as Ireland moves closer to being the first major EU country to secure beef market access in China.

Commenting on the Japan leg of the trade mission, Cormac Healy of Meat Industry Ireland said, “The Japanese market remains a key target for the Irish meat industry, reflected by the strong meat industry participation in the trade mission, with 10 companies that account for over 75% of our export business.

However, all on the mission agreed that making further progress into the Japanese beef market will be a slow process.

The next big step will be Bord Bia’s Marketplace International event in Dublin next April for invited foreign buyers interested in sustainable sourcing, which will include an expected 30 Japanese buyers coming to Ireland to meet Origin Green affiliated companies.

Bord Bia will expect export business to flow from the Marketplace International event within 12-18 months.

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