Argentina’s Foreign Ministry announced this week that Argentina has gained access to the European Union’s High Quality Beef (HQB) quota. The quota allows duty-free access for up to 48,200 metric tons (mt) of grain-fed beef that meets specific feeding and grading requirements. The United States, Australia, New Zealand, Uruguay and Canada currently have access to the quota.
Argentina is expected to be a formidable competitor, as it is currently the largest supplier of chilled beef to the EU. Argentina has the largest Hilton quota (30,000 mt), within which beef imported into the EU is subject to a 20 percent duty. A shift toward grain-fed production is expected in Argentina in order to capitalize on the benefits of the duty-free HQB quota – similar to what has already taken place in Australia and Uruguay.
Even before the addition of Argentina, reaching the quota’s capacity in the current quota year – which runs from July 1, 2014, through June 30, 2015 – was already a growing concern. In the quota year that ended June 30, 2014, usage was approximately 41,335 mt, equivalent to 86 percent of total availability.
Imports of U.S. beef under the HQB quota have grown from 6,375 mt in the 2008-2009 quota year to about 18,000 mt in the recently concluded 2013-2014 quota year. In the first three years of the quota’s existence, U.S. beef accounted for more than 75 percent of the shipments imported under the quota. But since the quota was expanded to its current capacity in 2012, in-quota shipments of Australian and Uruguayan beef – priced significantly lower than U.S. beef – have increased at a faster pace than those from the United States. As a result, U.S. share of quota usage fell below 50 percent (roughly 18,000 mt of the 41,335 mt total) in the 2013-2014 quota year.
There is also a possibility that the current quarterly (July 1-Sept. 30) allocation of 12,050 mt will be filled before the end of September. In a recent notice to exporters, USMEF detailed the procedures that are followed when the quarterly allocation approaches full utilization.