The European Union (EU) is a unique and relatively new market for U.S. beef. In addition to the EU’s longstanding restrictions on beef from hormone-treated cattle, high tariffs also made this market very difficult to penetrate until establishment of the EU’s duty-free high-quality beef quota in August 2009.

For the past three years, the quota has allowed 20,000 metric tons (mt)/year of high-quality beef at an in-quota tariff of zero. For the upcoming quota year (which began Aug. 1), the quota has been expanded significantly ‒ to nearly 46,000 mt. Exports under the duty-free quota are not exclusive to the U.S. but must meet this product definition:

  • Beef from cattle less than 30 months of age,
  • On feed for at least 100 days with minimum energy and intake requirements, and
  • Carcasses must be quality graded.

In addition to beef from the U.S., Europe has opened the quota to imports from Australia, Canada, New Zealand and Uruguay.

More U.S. beef suppliers would likely take advantage of the duty-free quota if an agreement can be reached with the EU on the use of antimicrobial washes for the purpose of reducing pathogens. Discussions continue between U.S. and EU trade officials on this key issue, but no timeline is yet in place for any change in the EU’s strict policies regarding pathogen-reduction technologies.

Through the first five months of 2012, USDA data for U.S. beef exports to the EU indicate volume (9,814 mt) is down 16% compared to last year, while export value is 2% lower at $86.8 million. However, EU import data are generally considered a more accurate measurement of U.S. beef trade activity in this market. According to these import data, the EU’s total 2012 beef imports from all suppliers are down 10% in volume (94,075 mt) and 8% in value ($904.76 million) compared to last year’s pace. While import volume is lower from all three of Europe’s top beef suppliers (Brazil, Argentina and Uruguay), imports from the U.S. are actually up 2% to 6,275 mt.

Total EU chilled beef imports are down 10% compared to last year at 38,243 mt. With imports from the U.S. being almost entirely composed of chilled beef (6,192 mt, up 2%), the U.S. is now the EU’s second-largest supplier of chilled beef with 16% market share. Imports from the EU’s top chilled beef supplier, Argentina, have fallen 18% this year, while imports from No. 3 supplier Brazil are up 6%. Imports from Uruguay and Australia are down 10% and 2.5%, respectively.   

According to John Brook, U.S. Meat Export Federation (USMEF) regional director for Europe, Russia and the Middle East, demand for U.S. beef remained very resilient through the first half of 2012 despite the weakened euro and increasingly high purchase prices. He cautions, however, that economic conditions are making the business climate more difficult.

“With the price of imported beef from South America easing, the price difference between U.S. beef and that of other origins has widened considerably in recent weeks,” Brook explains. “The short-term outlook for U.S. beef remains positive, as importers’ commitments for the summer months are for volumes slightly below recent levels.

“But the concern is for October 2012 and beyond, especially if the euro fails to appreciate against the U.S. dollar. Importers are being cautious in their planning for the fourth quarter and some have expressed serious concerns about their ability to maintain the current level of business into 2013,” Brook says.