5:31 AM Mar 11, 1994


Geneva 11 Mar (TWN) -- World beef prices are projected to firm up in 1994, and particularly in the Foot-and-Mouth Disease (FMD) area -- North America, Oceania, Japan and some other Asian countries -- mainly as a result of developments in the European Community, according to the GATT secretariat report on the International Markets for Meat.

Trade in bovine meat is governed since 1 Jan 1980 by the Tokyo Round agreement to which some 27 countries are signatories.

These arrangements would be superseded by the Uruguay Round Agreement on Agriculture and Sanitary and Phytosanitary regulations when they enter into force.

The world beef and veal production, according to the report, declined in 1993 by one percent, largely due to lower cattle inventories in the European Community, most Central and East European countries and the Commonwealth of Independent States (former Soviet Union).

The world meat markets felt the impress of the overall economic situation in 1993 -- a modest improvement in United States, deterioration and increased unemployment in Western Europe, but sustained economic growth in most Asian countries, excepting Japan where it remained weak, and the political, social and economic uncertainties in the transition economies of Central and Eastern Europe and the CIS.

In EC in 1993, cattle numbers decreased by three percent, estimated veal and beef production by five percent and exports by three percent. More important, the EC beef stocks fell to 600,000 tons or 45 percent down from 1992. These development were partly due to cyclical factors but also due to the trend towards lower dairy cow inventories and the shift from dairy to beef production. The reforms in the EC's Common Agriculture Policy was the main reason for the production drop.

According to FAO estimates, world meat production in 1993 was 184.2 million tons of which 52.8 million was of beef and veal -- with about twothirds or 34 millions produced in countries participating in the Meat arrangement.

For 1994, the EC's beef production is projected to stagnate or rise only marginally and this is expected to lead to significantly lower EC beef exports in 1994 of both live cattle and bovine meat. Even more significantly, beef stocks are forecast to be reduced by a further 40 percent to 360,000 tons -- the second lowest level in ten years.

All these developments are expected to result in firmer beef prices, especially in the FMD area and in increased export opportunities for other exporting countries, in particular the South American countries.

In 1995, the EC beef output is expected to rise partly because, following the strong 1992 beef cow retention, a large number of cattle were born in 1993/94 and by 1995 would have reached the slaughter age.

"There is however a margin of uncertainty, not least because the impact on beef production of other aspects of the CAP reform, including lower cereal prices (inside the EC), is difficult to predict," GATT adds.

In 1993, access to North American markets were again restricted. The US imposed "voluntary export restraint agreements" (VERs) on Australia and New Zealand for the third consecutive year. As a result these countries diverted exports to other markets, in North Asia and Canada. In the first months of 1993, Canada imported more beef from Oceania than during whole of 1992. As a result, it imposed additional 25 percent ad valorem tariffs on imports in excess of a certain quota from countries other than the US.

GATT projects that in 1994,market access to the US will be even more restrained -- as a result of the lower VERs negotiated with Oceanian countries. Canada has re-introduced import quotas for 1994, which might be renewed in 1995. But because of NAFTA, Mexican tariffs raised from zero to 20-25 percent in 1993, would not apply to imports from US and Canada.

In Asia, Japan's beef markets were further liberalized under the last reduction of beef import tariff within the terms of its 1988 liberalization agreement. South Korea has meanwhile committed itself to gradually increasing import quotas and providing more direct access for overseas sellers to its domestic distribution system.

A number of beef exporting countries also benefited in 1993 from the depreciation of their currencies visavis the US dollar and the Japanese Yen. Australia was one of the beneficiaries in the Japanese market.

World pigmeat production increased by less than one percent. Growth took place in the developing countries, notably China (up by six percent) which accounts for close to 40 percent of the world output. In 1994, global pigmeat production is forecast to rise by one to two percent, with major increase expected in China.

World poultry meat production also increased in 1993 -- continuing to be driven by the increased poultry meat consumption at the cost of the more expensive beef. In 1994, world poultry meat production is projected to increase further -- with exports which grew by five percent in 1993, expected to rise at an even stronger rate in 1994.

The world sheepmeat and goatmeat production fell in 1993. But output in China, the world's top producer ahead of the EC, expanded by eight percent. In the EC production stagnated. World shipmeat exports declined by four percent, largely as the result of reduced New Zealand sales.

But world production and exports are expected to recover in 1994.