RESTRICTED GENERAL AGREEMENT ON CG/2 18 1962 TARIFFS AND TRADE LimitedJune Distribution Group on Meat INTERNATIONALTRADE IN CATTLE ANDSHEEP MEAT The Council at its session from 22 to 28 February 1962 agreed to establish a Group on Meat composed of Argentina, Australia, EEC, New Zealand, United Kingdom, UnitedStates and Uruguay. The terms of reference of the Group are those set down by the Ministers in their recommendations in respect of trade in agricultural products: "to establish the basis for the negotiation of practical measures for the creation of acceptable conditions of access to world markets". The Council agreed that in the first instance the problems to be studied by the Group would relate to trade in meat of cattle and sheep. It was, however, understood that during the course of the work of the Group it might be found desirable to vary somewhat the scope of the study, for example by examining also the market situation in some related products, in which case other countries principally interested in the trade in those products might be asked to join the Group, The Council agreed that the secretariat should prepare for distribution a factual paper on international trade in cattle and sheep meat, including appropriate references to the findings of Committee II. The paper prepared by the secretariat and distributed under the symbol L/1772 was discussed in a preparatory meeting of the members of the Group on Meat from 21 to 23 May 1962. The present document is a revised version of document L/1772, prepared by the secretariat taking into account the comments made and the views expressed at that meeting. The Group may wish to take this paper into account in its future work. The procedures agreed on for reconvening the Group are set out in the Minutes of the meeting of the Council held on 24 to 31 May 1962 (see C/M/10). CG/2 Page 2 I. Introduction The present paesent has boon drawn up to provide a general survey, in outline rather than in detail, of the trends and most recent developments in the Droduction, trade and consumption of beef and veal, and mutton and lamb in the countries principally concerned as importers or exporters of those products. In considering these developments the paper draws attention to government policies, including tariff and non-tariff measures, which may influence the direction and magnitude of such developments. The methods through which government policies are implemented are also described in a general manner. The information given is derived mainly from date. provided in Committee II consultations, brought up to date by reference to published sources of information and by information given by delegations. The paper, while not attompting to draw specific conclusions as to the effects of the agricultural policies described, draws attention to the possible impact of those policies on the level of prices, production and consumption in certain countries; the possibility of such policies influencing shifts in production from one agricultural sector to another; and finally their impract on the economies of countries highly dependent on the export of the products covered by the paper and hence their effect on world trade as a whole. Attention is drawn to the limits within which this paper has been prepared. Thus, only two sectors of the moat market have been dealt with and trends in trade and developments in agricultural policies affecting competitive moat products have boon touched on only very indirectly. In addition, it will be recognized that government policies in relation to the production of such commodities as coarse grains and dairy products can have a very important offoct on meet production incentives. The paper does not attempt to assess the degree to which resources have, or have not, been diverted from other sectors of production to the production of meat. II. General Considerations in respect of Beef and Beef Products Domestic production provides the major part of total beef and veal supplies in most countries. Less than 5 por cent of total beef production enters into world trade. However, traditional beef exporting countries export a substantial portion of their production and in certain areas of these countries production of beef for export constitutes the main source of income. Exports of canned beef and by-products such as tallow, hides and skins, are also very important for the foreign exchange earnings of these countries. While the United States Pccounts for a considerable share of world imports, the trade is mainly directed towards Westorn Europoean countries. Of these countries, the United Kingdom is by far the most important importer, but Gormany and Italy also provide valuable markets. CG/2 Page 3 Frosh moat represents an important item in consumers' expenses for food products in high income countries. The demand for meat is more responsive to increases in incomes than for most other foodstuffs. In particular, for countries like Italy, where the level of consumption is still relatively low, and Germany, the expenditure on meat generally tends to increase as fast as total private expenditure. However. the effects upon the consumption levels of increases in incomes may be offset by an adverse movement in retail prices. The levelling off in per capita consumption of beef and veal which took place in 1958 and 1959 in several European countries, for instance in Germany and France., soon largely to have boon linked with the large increases in beef prices, particularly prices of qualities of beef for which there is a strong consumer demand, experienced by these countries. Similarly in Argeatina there is a relation between the increase of meat prices in 1958 and 1959 and a considerable fall in per capita consumption in those years. Further, the reletive prices of beef and veal compared with those of mutton and lamb or pork, and more recently of poultry, have had a significant influence on the development of beef and veal consumption during the last decade. Furthermore, consumer habits and the possibility of substitution by other foodstuffs affect meat consumption. III. Consumption and Supplies of Beef and Veal in the Main Importing Countries Situation in the United Kingdom In the United Kingdom, the total consumption of meat increased by about 7 per cent between 1954, the last year during which meat was rationed, and 1957. During this period, the consumption of pig meat, mutton and lamb remained practically unchanged, whereas consumption of beef and veal rose by more than 20 per cent. Contrary to what happened imnediately after the end of food rationing, the total consumption of moat declined slightly between 1957 and 1959 and recovered in 1960 to a level exceeding by only 1 per cent that of 1957. Developments during this period illustrate the influence of prices on consumption especially as regards the meat consumed as unprocessed carcass meat1 (i.e. excluding bacon and ham, sausages, other prepared meat, canned meat and offals). A substantial rise in retail prices (more than 10 per cent) for beef and veal reflecting reductions in supplies on the United Kingdom market was accompanied by a decline by about 8 per cent in consumption. By contrast, for mutton and lamb stable prices were accompanied by a rise of about 10 per cent in demand, and for poultry a substantial decline in prices was correlated with a large increase in consumption. 1 The information given in this paragraph is taken from the calculations made regularly by the National Food Survey Committee. CG/2 Page 4 In 1961, in spite of a significant decline in wholesale prices, there are indications that the retail prices of beef and veal did not change much, nor did the quantities consumed. It should be noted in this respect that the fall in wholesale prices was particularly heavy for cheaper qualities of beef, while consumers continued to pay high prices for qualities for which there was a strong demand. Production of beef (see Table 1) fell by 6 per cent between 1954 and 1955, but thereafter showed no substantial variation until 1961, except for 1959 when production fell sharply owing to a number of factors of which the most significant was a sharp fall in imports of cattle for fattening from the Irish Republic. The latter was a consequence of the veterinary regula- tions imposed on imports of such cattle following the completion of the tuberculosis eradication campaign in the United Kingdom. There was, however, a heavy fall in imports from the traditional exporting countries from 1958 onwards, as a result of the emergence of the United States as a market for beef and of the fall in the exportable surplus of chilled beef in the Argentine. The lower quantities available for consumption as a result of these movements led to the increase in wholesale, and retail prices referred to earlier. In 1961 home production increased substantially (by 10 per cent) due partly to increased shipments of live cattle for fattening from the Irish Republic. Wholesale prices fell substantially, due partly to the increased level of supplies of beef and also, among other factors, to the heavy supplies both of lamb and poultry which wore available. The low level of prices was no doubt one of the factors which led to a further reduction in imports from the traditional suppliers. In the light of this situation the United Kingdom Government requested the traditional supplying exporting countries to take these factors into account in preparing their 1962 programme of exports to the United Kingdom. In 1961 the proportion of total beef consumption represented by fresh beef increased considerably as a result of the higher home production and higher imports of fat cattle and fresh beef from the Irish Republic.