03 March 2004

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Non-EU beef imports await lethal blow upon accession

By Matthew Vella
The importation of beef from the international market stands to take a crippling blow as EU accession will mean higher prices on both sides of the economic divide, The Malta Financial and Business Times has learned.
The price of beef is expected to encounter a hike upon EU accession both with beef imported from within the EU, and outside the EU. Labour MP Noel Farrugia, shadow agriculture minister, talked with this newspaper about the damning implications:
“EU accession and our entry into the Common Agricultural Policy will effectively entail over 700 controls in the form of tariffs and quotas on food products which we currently import from the international market, EU or non-EU.
“Being a net importer, Malta currently imports its beef at the competitive prices it shops for from within the entire international market. In the case of EU imports, we benefit from the EU’s external price on beef, which is EUR2.50 per kilo. This is the price at which the EU sells its beef to countries outside the EU in order to compete with other beef producing countries such as South America, Australia and New Zealand. “However, EU beef or veal sold to Sicily, for example, is charged at the EU’s internal price, which is EUR4.5 per kilo. This is the price which Malta will be charged when it imports its beef from the EU, which is the majority of our beef importation, except without the levy that was previously charged on importation.”

According to Farrugia, the impending scenario is more grim as non-EU beef will now be subject to duties and tariffs: “New Zealand beef is safe, high-quality beef since it has not been affected by Mad Cow disease. We currently import around 1,000 tonnes a year of New Zealand beef alone. The levy on all beef is at 10c per kilo. Upon EU accession on May 1, this levy will fall and all non-EU beef imports will be subject to a duty of 12.8 per cent on the value imported, and a tariff of EUR1.76 per kilo.
“On the grounds of both these scenarios, Malta stands in for a price increase when it comes to beef. Upon joining the EU, we shall be paying an additional average of EUR1.4 per kilo on the beef we import from the EU, which is approximately 4.8 million kilos a year. That amounts to Lm6.72 million higher.”
Valhmor Borg importers Managing Director David Borg concurs with the scenario, stating the increased price on non-EU beef will make the importation of beef unworkable at such high costs, discouraging the importation of beef from outside the EU:
“EU beef exporters are currently given a refund of EUR1.37 for every kilo of beef exported to Malta, to keep prices down. The EU will remove this subsidy definitely by May 1, 2004, and possibly before to ensure the 10 accession countries will not over-purchase large stocks of food prior to May 1 and speculate on prices. Without knowing from where this subsidy will be coming to regularise prices, this can only mean that the added price will be reflected on our price,” Borg told this newspaper.
He also said the government had committed to make good for the removal of these subsidies through an EUR840,000 state aid in the case of beef. According to Borg, this subsidy will not last long enough to aid the regularisation of prices following accession.
Labour MP Noel Farrugia said the government will be forking out a total of Lm7 million in food subsidies, of which EUR840,000 are destined for the beef market: “The levy on beef, standing at 10c per kilo on beef imported from the international market, generated Lm5 million in revenue. That will be removed on all frozen beef and instead Lm7 million in subsidies will be forked out by the state.
“It is good to ask from where these Lm7 million in subsidies will be coming from, and whether the subsidy can last long enough to sustain the beef prices. The beef subsidy is not enough to compensate for the price increase on both EU and non-EU imports. So who will be paying the difference between the internal and external EU price? Government should stop making false declarations on this matter. This is a net importing country where over 60 per cent of Maltese people’s disposable income is spent on food. Now we cannot shop around for the best international price on beef. We don’t even have enough land to increase our own food stock.”
And there is also another concerning factor about the future beef prices about to hit Malta following accession. In order to discourage imports from outside the EU, a quota of 300 tonnes of non-EU beef imports for the whole Union will be set, severely limiting the feasibility of importing non-EU beef imports at such high prices in limited amounts.
David Borg told this newspaper his company has been asking the government authorities about how these regulations will be put into action, but has failed to get any answers: “We still don’t have any answers on how the quotas will be allocated and distributed. I have asked hundreds of questions and I still have no answer on what we can expect.”

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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