COVID-19 drives down usage of EU beef quotas

Thursday, 6 August 2020

By Rebecca Wright

The EU has long been an attractive market for major beef exporters around the world. There are various EU beef import quotas available, offering a reduction in in the tariff payable. However, these are only available for a limited volume and for certain products. The two most commonly talked about are the autonomous beef quota and the “Hilton” beef quota.

The autonomous beef quota, EU 481 grain fed quota, which was put in place to resolve the US/Canada and the EU beef hormone dispute has seen its utilisation fall in 2020. In total during the year 45,000 tonnes can be imported under this zero-tariff quota, with an equal allocation allowed during each quarter.

There have been recent changes to how the quota works. Previously, it was managed on first-come-first-served basis, and available to all. Now however, the US has an allocated share of 18,500 tonnes, which will rise to 35,000 tonnes over the coming years.

Typically utilisation stood close to 100% for each quarter, however Q1 2020 utilisation stood at just 96% and Q2 utilisation was even lower at 76%.

As for the Hilton high quality beef quota, for the most recent management period utilisation appears to have been lower than in previous years. We are still awaiting for the final month of data to be published. Historically, utilisation has stood between 70% and 75%.

There are various other beef quotas available although only two of them are for a significant volume. There is a quota of 54,875 tonnes for frozen boneless beef which is often popular as the tariff is significantly reduced from the EU WTO external tariff. In contrast, the other quota, for frozen beef for further processing/manufacturing, is rarely used. 

COVID-19 disruptions to trade are likely to have been at least partially behind the decline in quota usage. COVID-19 control regulations caused a sharp change in consumer habits which changed demand dynamics around the world.

After the end of the Brexit transition period, the existing EU WTO quotas are due to be split between the UK and EU based on historic usage. The 481 grain fed quota is not included within this, as it is not a WTO ratified quota. It is widely assumed by many that the entirety of this quota will remain with the EU after 1 January 2021.

Rebecca Wright

Analyst - Red Meat

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