This week EU and the corresponding UK legislation came into effect allowing the resumption of the beef trade from the island, banned for the past 10 years due to the high incident of bovine spongiform encephalopathy (BSE).
Before the BSE crisis in 1986, the UK's beef exports were worth about £1bn (€1.5bn) compared to £20m (€29m) in 2004, according to Food from Britain, a consultancy.
While the increased supply to the continent is expected to lower prices on the island, the cost of beef in the UK is expected to rise by a quarter according to estimates.
Exports of beef, including pedigree and commercial cattle, from the UK to other EU countries is due to commence on 3 May.
"With the ongoing problems for imports from South America and reduced production in most member states, market sources indicate that if UK product is priced competitively then now is a good time to secure market share," according to an analysis issued by the US Department of Agriculture (USDA).
The environment for restarting exports of beef to Europe is positive at the moment, according to the report From the middle of October 2005, the EU placed a ban on imports of beef from specified states in Brazil as a result of a confirmed outbreak of foot and mouth disease.
From March 2006, the Argentinean government suspended the majority of its beef exports for a six-month period in an effort to curb rising domestic beef prices.
At the same time most EU member states are reporting reduced production.
"This means supplies of beef in the EU are tight, particularly of manufacturing beef," the USDA report stated.
The UK's Meat & Livestock Commission (MLC) believes that initial UK beef exports will be targeted at the price sensitive food service sector.
The MLC also highlights that the beef will need to be price competitive.
Although UK beef prices have been rising in recent months, they still remain low compared to most potential EU destinations.
The MLC forecasts that exports will increase steadily over the next two years from the current 11,000 tonnes a year to 50,000 tonnes in 2007.
UK government agencies are also reporting substantial interest for the export certification for live cattle.
While this trade is initially expected to be in pedigree animals, a resumption in exports of calves to the continent, predominantly France, for the veal sector is also forecast.
The resumption of UK beef exports means Britain’s prices could rise by up to a quarter, according to the National Beef Association (NBA).
Most farmers now sell below cost price, with British premium beef – skinned and cleaned – costing £2 (€2.87) per kilo at wholesale.
But the current European average is £2.40, according to Duff Burrell of the National Beef Association (NBA), as quoted in sister publication Food and Drink Europe.
Burrell believes UK premium beef prices could rise to around £2.50 per kilo.
The Italian prime beef average price is £2.57, and Italian buyers are already talking to UK traders keen to break the supermarket stranglehold on price and margin, he said.
“On top of that Spanish and Portuguese cattle are levelling out at £2.35 and the French average is £2.31,” he said.
“In these circumstances it is impossible for the 12 per cent, 15 per cent, even 30 per cent discount between UK prices and those elsewhere in the EU to be maintained.”
The ban on the export of UK beef was originally issued in March 1996, due to the high incidence of BSE cases in the UK at the time.
In 1999, the ban was amended to allow de-boned beef and beef products from the UK produced under the date-based export scheme (DBES) to be exported.
Under the DBES, the Britain could export beef and products from cattle born after 1 August 1996, subject to a series of strict and limited conditions.
But in practice, the DBES did not result in the export any significant amount of UK beef.
The European Commission recommended removal of the embargo on the basis that the UK has fulfilled the conditions laid down by the Commission in its July 2005 plan to ease controls throughout the bloc as BSE cases fall.
Processors who import their beef from Argentina were left scrambling for another source of supply as the country's president announced last month the suspension of trade in the commodity for the next six months.
Many European beef importers are reliant on sourcing beef from Argentina.
Under the General Agreement on Tariffs and Trade significant access was given to Argentine beef in the EU, which gave Argentina a quota of 28,000 metric tonnes of high quality bone-in and boneless cuts out of its total tariff rate quota of 59,100 mt.
Most of the imported beef goes to Germany.
Cattle slaughter numbers and beef production in the EU are forecast to increase in 2006, because of the end of the over-thirty-month scheme in the UK, which is expected to make about half a million extra cattle born after 1 August 1996 available for human consumption.
The influx of new supplies is forecast to mainly displace UK beef imports from Ireland, which in turn will displace beef imports to the EU continent mainly from Brazil, according to a recent report by the EU's food and drink association.
The EU ban on beef from parts of Brazil, in response to the outbreak of foot-and-mouth Disease (FMD), is expected to push this transition, and keep EU cattle and beef markets firm.
EU cattle prices have reached record prices towards the end of 2005 as a result of the tight market situation.
This has led to a slight decrease in beef consumption in 2005.
Beef consumption is forecast to increase again in 2006.
A tight domestic supply and a steady demand are projected to keep beef prices at a relatively high level, attracting more imports entering at full duty, notably from South America, the association stated.
EU imports from Brazil and Argentina, the two main EU suppliers of food and drink products, resumed their increase in 2004, after stagnation in 2003.
Together, the two countries account for one-fifth of total EU food and drink imports.
EU companies imported €3.7 billion worth of food and drink products from Argentina in 2004, or about nine per cent of the total.
Beef exports from Argentina surged to €1.09 billion last year from €684 million in 2004.
The discovery last year of foot-and-mouth disease on ranches in the northern province of Corrientes led to a EU ban on beef from the region.
The foot-and-mouth outbreak was discovered less than three months after Kirchner decided to increase Argentina's tax on beef exports to 15 per cent from five per cent and to cancel rebates of other taxes for meat exporters.
For the first time in 20 years consumption of beef and veal surpassed EU production in 2003 and is expected to grow further by 2012, according to a forecast report by the Commission.
UK Beef Market Trends (from Meat and Livestock Commission) Beef Supplies '000 tonnes 1985 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Production 1155 1001 974 702 696 697 678 707 652 692 696 709 758 Imports (a) 179 174 173 187 217 160 191 188 256 314 330 346 294 Exports (a) 185 124 274 58 0 0 0 0 0 0 7 8 11 Total Consumption 1132 997 895 740 842 869 904 930 919 986 1018 1041 1048 UK Market Share % 84 83 81 75 74 82 79 80 72 68 68 67 72 (a) Carcase Weight Equivalent 2005 Imports: Top 5 Countries 000t % Ireland 162.6 55.2 Brazil 41.9 14.2 Netherlands 15.8 5.4 Argentina 11.8 4.0 Germany 11.5 3.9 Other Countries 50.6 17.2 Total 294.3 100.0