Magellan shows the way forward for beef trade

Magellan shows the way forward for global beef trade

Federated Farmers of New Zealand (Inc) has welcomed the release of the final phase of the Magellan Project which graphically illustrates the potential gains to New Zealand beef producers from the removal of international beef trade barriers.

As a major beef exporter, New Zealand stands to gain significantly from the removal of trade barriers in highly protected beef markets such as Japan, Korea and the European Union.

Under the Magellan Project, beef producers in the United States, Canada, Mexico, New Zealand and Australia (the Five Nations Beef Group) have, for the first time, collaborated to undertake specific research to estimate the gains from further liberalisation of the global beef market. The Project also aims to better understand the political forces needed to bring about reductions in trade barriers to beef and to devise appropriate strategies for reform.

The final phase of the Magellan Project brings together input from the Centre for International Economics and highly respected academics in the most protected beef markets of Japan, Korea, France, Germany and the United Kingdom. Their papers outline the historical reasons for the protectionist attitudes towards the beef industries in these countries and how the climate for reform is beginning to build. Importantly, options to achieve further reform are identified.

Government payments make up over 90 per cent of beef producer incomes in the European Union, 60 per cent in Korea and over 30% in Japan. This contrasts with New Zealand beef cattle producers who must compete in global markets without any form of significant subsidies.

The Magellan Project quantifies that New Zealand beef producers would benefit far more under the proposals put forward by the Cairns Group or the United States than proposals put forward by the EU or a repeat of the Uruguay Round outcome (the preferred Japanese position).

A free trade outcome under the Doha Round would deliver a relative 12 per cent increase in New Zealand beef producer profits while the Cairns Group proposal would deliver a 10 per cent increase. In comparison, the European Union proposal would deliver only a 3.1 per cent relative increase in profits and the Japanese position only a 2.2 per cent increase.

Federated Farmers President Tom Lambie, said that New Zealand beef producers have much at stake in the Doha Round of World Trade Organisation negotiations and support the Cairns Group proposal as the most ambitious for free trade.

"Agriculture must be a priority area in the agricultural negotiations of the Round and that reform of trade barriers for beef should be at the centre of these negotiations."

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