Brexited | the worst threads live the longest

[sun_tzu]

Australia doesn't tend to ship meat container at a time but rather whole ship at a time.

then its probably going to be even less than 5% of the cost (economies of scale etc)

 

[JPRouve]

Last time I got a 40 foot container from Australia to Uk It was about £3,000... shipping is crazy at the moment but lets say £5,000
A cow carcas is what 350kg? and you get something like 200kg of meet off it
in a 40 foot container apparently holds about 50 carcas (All these figures from google by the way except the shipping)
50 Carcas at 200kg each = 10,000 KG
what is beef on average around £10 per kg?

so each container is worth around £100,000 of beef and costs circa £5,000 so 5% would be my estimate

The thing is that competitivity in the meat industry is in the cents, those 5% are a big problem. Keep in mind that with frozen meat we are mainly talking about the processed food industry.

Edit: For beef and carcas at Rungis the highest fee is 5.5€/kg at the moment.

 

[JPRouve]

Not that high actually. I mean it can't be that expensive, since we get loads of stuff from overseas and it costs less than German products.
We get all sorts of stuff here in German discounters ("cheap supermarkets") from New Zealand, Australia, Peru, Chile, South Africa etc.
I would guess for example that lamb meat from Oz or New Zealand is cheaper than lamb from Germany.

It depends on the product you are talking about and the local production, not all industries are equal. And as far as I know Oz and NZ meat don't dominate european markets.

 

[sun_tzu]

The thing is that competitivity in the meat industry is in the cents, those 5% are a big problem. Keep in mind that with frozen meat we are mainly talking about the processed food industry.

the truth probably lies somewhere between these takes
https://www.theguardian.com/busines...-farmers-fear-surge-of-imports-from-australia (doom and gloom)

limited interest from australian producers
https://www.theguardian.com/busines...he-cold-australian-farmers-on-a-uk-trade-deal

There always seems to be a lot of New Zeeland Lamb in the supermarket though - even though we produce (or at lead produced pre brexit) a lot of lamb for export so I guess some people make the maths work

 

[sun_tzu]

It depends on the product you are talking about and the local production, not all industries are equal. And as far as I know Oz and NZ meat don't dominate european markets.

As far as I know they have limited access to European Markets therefore it would not be possible to dominate them

 

[Adisa]

Does anyone know what UK standards are now or is everything waved through?

I don't see the point of zero tariffs of you are going to put up non-tariff barriers. Insisting on standards the Aussies can't meet is a non tariff barrier and the Aussies will know this. My guess is standards will be eased to some extent. No chance they remain the same.

 

[JPRouve]

the truth probably lies somewhere between these takes
https://www.theguardian.com/busines...-farmers-fear-surge-of-imports-from-australia (doom and gloom)

limited interest from australian producers
https://www.theguardian.com/busines...he-cold-australian-farmers-on-a-uk-trade-deal

There always seems to be a lot of New Zeeland Lamb in the supermarket though - even though we produce (or at lead produced pre brexit) a lot of lamb for export so I guess some people make the maths work

The problem with the math is that it says that the UK have a surplus of production, what the article describes is how the industry worked while being in the EU, at that time UK and Oz/NZ producers weren't in direct competition because british producers had a particularly easy access to EU markets, now UK producers and NZ/Oz producers are much closer due to brexit, in theory british producers will focus more on local markets which could actually reduce imports.

And I'm not in the doom and gloom or bonanza camp, I think that the answer is indeed between the two which is why I said that I don't see a big change outside of high quality australian meat, the reason I mention that market is simple, high quality trumps cost in almost all markets because the main customers in those markets have the mean to pay the premium.

 

[UweBein]

It depends on the product you are talking about and the local production, not all industries are equal. And as far as I know Oz and NZ meat don't dominate european markets.

No, definitely not. But they do dominate certain sectors. Let's say, if you go to a discounter in Germany, and you buy lamb, you can bet that it's from overseas.
Discounters probably won't buy lamb from local or european producers. (It's not the fact that it is too expensive for them. You can actually buy cheap lamb meat in Germany if you go to the right vendor. I guess that local and european producers can't offer the amount of lamb that a discounter chain needs.)

 

[JPRouve]

No, definitely not. But they do dominate certain sectors. Let's say, if you go to a discounter in Germany, and you buy lamb, you can bet that it's from overseas.
Discounters probably won't buy lamb from local or european producers. (It's not the fact that it is too expensive for them. You can actually buy cheap lamb meat in Germany if you go to the right vendor. I guess that local and european producers can't offer the amount of lamb that a discounter chain needs.)

Lamb is a small market(around 15%) and not cheap compared to beef, chicken or pork. In that particular market Nz and Australia control global markets but it's a marginal one.

 

[Paul the Wolf]

I don't see the point of zero tariffs of you are going to put up non-tariff barriers. Insisting on standards the Aussies can't meet is a non tariff barrier and the Aussies will know this. My guess is standards will be eased to some extent. No chance they remain the same.

That seems to be the whole point of this, standards will be lowered. UK keen to have deals with countries whose certain food products do not meet EU standards. If the UK government were so keen on preventing a problem with the NI sea border they would agree to align completely with EU food standards. Thus once the UK start importing food products with sub-EU standard products they will have entered the UK market and checks will increase with exports from the UK to he EU to ensure sub-standard products do no enter the EU which means even more problems for UK producers.

Prices/tariffs are only a part of it.

 

[Adisa]

That seems to be the whole point of this, standards will be lowered. UK keen to have deals with countries whose certain food products do not meet EU standards. If the UK government were so keen on preventing a problem with the NI sea border they would agree to align completely with EU food standards. Thus once the UK start importing food products with sub-EU standard products they will have entered the UK market and checks will increase with exports from the UK to he EU to ensure sub-standard products do no enter the EU which means even more problems for UK producers.

Prices/tariffs are only a part of it.

That seems to be the whole point of this, standards will be lowered. UK keen to have deals with countries whose certain food products do not meet EU standards. If the UK government were so keen on preventing a problem with the NI sea border they would agree to align completely with EU food standards. Thus once the UK start importing food products with sub-EU standard products they will have entered the UK market and checks will increase with exports from the UK to he EU to ensure sub-standard products do no enter the EU which means even more problems for UK producers.

Prices/tariffs are only a part of it.

You're right. I also feel it is a slippery slope. Once we ease for Austrlia, US and Canada will demand the same. Our products face more hurdles at the Irish border and also competing with ever lower substandard products from the rest of the world. We lose from both ends.
But on the wider issue of signing the deal. Our government only has two options. Lower standards to align more with US/AUS/China etc or align with the EU. We have to choose one, there's no in-between. And this is what we have always said since the beginning. We are not in a strong enough position to be determining standards in any free trade deal. We either take it or leave it. So if we chose to diverge from EU alignment, we have no choice but to lower our standards. The public have made their choice. In that sense, the farmers raising hell over this proposed deal should have done so long ago. It is too late now. The ship has already sailed.

 

[Paul the Wolf]

You're right. I also feel it is a slippery slope. Once we ease for Austrlia, US and Canada will demand the same. Our products face more hurdles at the Irish border and also competing with ever lower substandard products from the rest of the world. We lose from both ends.
But on the wider issue of signing the deal. Our government only has two options. Lower standards to align more with US/AUS/China etc or align with the EU. We have to choose one, there's no in-between. And this is what we have always said since the beginning. We are not in a strong enough position to be determining standards in any free trade deal. We either take it or leave it. So if we chose to diverge from EU alignment, we have no choice but to lower our standards. The public have made their choice. In that sense, the farmers raising hell over this proposed deal should have done so long ago. It is too late now. The ship has already sailed.

Quite. But it was the same with the fishermen. I get the impression that a large proportion of fishermen were in favour of Brexit as well as farmers . Either they took everything for granted that things would stay the same or better. But surely being in the industry they must have known that to sell their seafood to their main customers who are the EU and will always be the EU they have to be able to process the seafood in EU processing plants. It makes absolutely zero sense. But what does with Brexit?

 

[F-Red]

I doubt the reliability of the supply chain will be of any concern.

The last 12 months would disagree with your confidence. This isn't a question of whether Australia can produce, it's whether a supermarket buying team wants to be reliant on imports which are located furthest away from them. Former colleagues of mine, who work in those teams, certainly are more concerned over location of supply than ever before.

 

[Wibble]

The last 12 months would disagree with your confidence. This isn't a question of whether Australia can produce, it's whether a supermarket buying team wants to be reliant on imports which are located furthest away from them. Former colleagues of mine, who work in those teams, certainly are more concerned over location of supply than ever before.

They may well be concerned but it wouldn't be an especially logical concern. Australia has a record of mass meat export all over the world and in the end bang for buck usually wins. I also assume that Aussie meat would be mid to high range in quality as low quality meat could be sourced cheaper elsewhere. How much imports would increase due to such a deal will also depend on how badly UK producers are affected by leaving the EU both in terms of both import and export (especially carvas and offal export) and what that does to prices.

Australia will view any such a deal as a win as the risk is low and the potential benefits medium to high. The benefit to the UK is mainly political.

 

[Xeno]

How many cows can you fit in a 787?

 

[711]

I'm not sure now. Is a deal with Australia bad because we will import all our beef from them and put our farmers out of business, or is it bad because we won't import any beef at all because the transport costs and unreliability put people off buying it, although why that would be bad I'm not sure?

Or are some people just determined to find fault with any deal, with anyone, that could possibly be done, whatever it is?

 

[Cheimoon]

Yeah, I'm gonna call bullshit on "Every economist knows that minimum wages either do nothing or cause inflation and unemployment. That's not a statement, it's a definition."

If evidence is necessary, @NotThatSoph had some good posts on raising minimum wages recently:

That Econ 101 thing is (I'm sure you know this) with a simple supply and demand model with perfect competition: a minimum wage set above market wage puts the market out of equilibrium, resulting in deadweight loss. Employers will be strict losers, while some employees will gain and other lose (increased unemployment). Net effect will be negative, net effect for employees can be positive but unemployemt will increase outside of some crazy elastisities. It's a useful framework, but applying that to the job market specifically is ... optimistic, for several reasons.

I don't think it's useful necessarily to poll economists broadly when we're talking about specific empirical questions regarding labor economics (which is of course a specialized field on its own). Jerneck's tweet touches on this indirectly when he points out that labor economists are more likely to support minimum wage increases. You see this is most fields, if you poll philosophers on metaethics then professors working in that specific subfield will have very different views than the average professor (the ethicists are moral realists in much greater numbers, if I remember correctly). In modern academia things are so specialized, there's a limit to how up to date you can be on all the things.

Dube is usually the main go-to guy regarding American data, and his current view is that we have good data on minimum wage increases up to 50-60 % of median wage. Practically no evidence of job loss at this point. Median wage is very different in NYC and rural Mississippi, so how $15/h fits into that is complicated. But the 50-60 % point is just where the data stops (it might be even higher now, I'm too lazy to confirm), not when minimum wage increases suddenly turn bad. And increased unemployent is only one factor when evaluating a minimum wage anyway, not the whole thing.

Out of curiosity: how does this Dube does his modelling? Do you have a link? I have read before about economists often doing their modelling/predictions based on the assumption of the 'perfect' free-market economy, which is of course flawed as that doesn't exist in practice and people also don't behave fully rationally as expected; but I'd be curious about more reality-based modelling.

Ok, so, this isn't a straight forward question. Models like the very general supply and demand model, or a Solowian growth model, or a Heckscher-Ohlin model trade model etc. etc. are big M models which aim to explain how/why something happens or maybe even will happen. The actual effect of minium wage policies is an empirical question, but empirics is difficult because you're trying to measure the real world which is influenced by a ton of different things, so you need empirical models to do this. You can't just observe that a minimum wage policy happened and then unemployment changed by X some time later and that's that.

In this (pdf file) relatively new working paper Dube et.al. use an empirical model to analyze the effect to 138 minimum wage changes over a 35 year period, where they use bunching (they look at changes in employment directly below and above the minimum wage treshold). This isn't really what most people have in mind when talking about models, though.

There are several different models looking at the labor market specifically, but the easiest is to just think of it in the same supply and demand framework I described above but where employers have some degree of market power. So instead of that graph with two lines you see when you google "supply and demand" you get something like this:


With perfect competition the market clears where supply intersect with demand, so at E1 employment at a wage of W1. If employers have market power then you get that third line (because employers can lower the market wage by restricting how many they employ, with full competition they can't), so market wage will be the lower W3 at the lower employment level E2. If a minimum wage is set at a level higher than W3 but not exceeding W1 then wages will rise and employment increase. Above W1 you'll start getting the same effects you see if you google "supply and demand price floor". This is basically what Dube et.al. talks about here (a monopsony is the same thing as a monopoly, but from the demand side instead of the supply side).

So this basically non-answer is that Dube is looking at the labor market using the classic supply and demand model/framework described in Econ 101, but where employers have some degree of market power. He's using a wide variety of empirical models to isolate the effect of the minimum wage policies on wages and employment, and he's then using those empirical findings to predict the effect of future minimum wage policies.

Obviously, if increasing the minimum wage could be a good idea, then having minimum wages in the first place could be a good idea as well.

 

[Paul the Wolf]

I'm not sure now. Is a deal with Australia bad because we will import all our beef from them and put our farmers out of business, or is it bad because we won't import any beef at all because the transport costs and unreliability put people off buying it, although why that would be bad I'm not sure?

Or are some people just determined to find fault with any deal, with anyone, that could possibly be done, whatever it is?

The amount of beef the Uk will import from them will be small, tiny even.
Australia shipping to the UK tariff free is for their benefit not the UK's. Especially useful for Australia while they have their problems with their main market China, gives them a bit of pin money.

The damage to UK farmers won't be just because the UK have imported some beef from Australia, which may or not be cheaper; it opens a can of worms if the UK go down the route of importing foodstuffs that are not up to EU standards. Levels of trust are pretty low at the moment. So the EU will check every lorry and container if they think there's a danger of any getting into the EU market which in turn will severely damage access to the UK's main market, the EU.

 

[F-Red]

Last time I got a 40 foot container from Australia to Uk It was about £3,000... shipping is crazy at the moment but lets say £5,000

Don't know how I missed your post earlier, current rate for a 40ft from Far East is about $12k today, crazy doesn't cover it.

 

[Don't Kill Bill]

Last time I got a 40 foot container from Australia to Uk It was about £3,000... shipping is crazy at the moment but lets say £5,000
A cow carcas is what 350kg? and you get something like 200kg of meet off it
in a 40 foot container apparently holds about 50 carcas (All these figures from google by the way except the shipping)
50 Carcas at 200kg each = 10,000 KG
what is beef on average around £10 per kg?

so each container is worth around £100,000 of beef and costs circa £5,000 so 5% would be my estimate

Interesting. Is this refrigerated?

 

[Paul the Wolf]

Don't know how I missed your post earlier, current rate for a 40ft from Far East is about $12k today, crazy doesn't cover it.

Is that a standard box or a refrigerated unit?

 

[F-Red]

Is that a standard box or a refrigerated unit?

Standard

 

[Paul the Wolf]

Standard

Ooooh

 

[Don't Kill Bill]

Standard

So what is the refrigerated cost, does anyone know?

 

[Wibble]

Currently we export primarily organic/grass fed high quality meat to the EU (including the UK until recently) which attracts a 20% tariff so there is lots of margin to cover any increase in transport costs. It will be this market that we will primarily be thinking will grow with a FTA

 

[Paul the Wolf]

Currently we export primarily organic/grass fed high quality meat to the EU (including the UK until recently) which attracts a 20% tariff so there is lots of margin to cover any increase in transport costs. It will be this market that we will primarily be thinking will grow with a FTA

I get it from an Australian point of view but what's in it for the UK?

The 20% tariff will reduce over the next 15 years, the additional transport costs may be mitigated by the reduction in the tariffs.
If the quality is the same there may not be problem for the quality but if there is no FTA in the future with the EU then the EU will not allow products made in the UK with products from Australia that should have a 20% tariff, ie. not coming through the back door. Rules of Origin problems

If there is a future FTA between the EU and Australia then the political point scoring will be like a deflated balloon as the UK would have benefitted from the deal had they stayed in the EU.

From the other angle, a FTA is supposed to be for the benefit of both sides, therefore tariff free access to Australia for UK exports , so far the only thing I can find is that British farmers would have the same access to Australia but if Australia produce cheaper meat why would they buy British meat even if there are no tariffs because it would be more expensive to produce plus the same transport costs added on.
Plus British farmers will have even more forms to fill out than they do now to the EU and didn't have at all pre-Brexit.

 

[Wibble]

I get it from an Australian point of view but what's in it for the UK?

The 20% tariff will reduce over the next 15 years, the additional transport costs may be mitigated by the reduction in the tariffs.
If the quality is the same there may not be problem for the quality but if there is no FTA in the future with the EU then the EU will not allow products made in the UK with products from Australia that should have a 20% tariff, ie. not coming through the back door. Rules of Origin problems

If there is a future FTA between the EU and Australia then the political point scoring will be like a deflated balloon as the UK would have benefitted from the deal had they stayed in the EU.

From the other angle, a FTA is supposed to be for the benefit of both sides, therefore tariff free access to Australia for UK exports , so far the only thing I can find is that British farmers would have the same access to Australia but if Australia produce cheaper meat why would they buy British meat even if there are no tariffs because it would be more expensive to produce plus the same transport costs added on.
Plus British farmers will have even more forms to fill out than they do now to the EU and didn't have at all pre-Brexit.

I suspect the economic benefits are mainly Australian and the political benefits mainly the UK"s

 

[golden_blunder]

Hey JRM says that he has eaten Aussie beef and it’s fine. Down with quality checks!

 

[Cheimoon]

I get it from an Australian point of view but what's in it for the UK?

The 20% tariff will reduce over the next 15 years, the additional transport costs may be mitigated by the reduction in the tariffs.
If the quality is the same there may not be problem for the quality but if there is no FTA in the future with the EU then the EU will not allow products made in the UK with products from Australia that should have a 20% tariff, ie. not coming through the back door. Rules of Origin problems

If there is a future FTA between the EU and Australia then the political point scoring will be like a deflated balloon as the UK would have benefitted from the deal had they stayed in the EU.

From the other angle, a FTA is supposed to be for the benefit of both sides, therefore tariff free access to Australia for UK exports , so far the only thing I can find is that British farmers would have the same access to Australia but if Australia produce cheaper meat why would they buy British meat even if there are no tariffs because it would be more expensive to produce plus the same transport costs added on.
Plus British farmers will have even more forms to fill out than they do now to the EU and didn't have at all pre-Brexit.

It doesn't have to be like for like though. Is there nothing else the UK could export to Australia?

 

[Paul the Wolf]

It doesn't have to be like for like though. Is there nothing else the UK could export to Australia?

I was trying to find what else is included but the only thing I can find mentioned is agricultural products. Both countries already export things to each other, I did for 30 years, but depends if there are any reduction in tariffs involved. Freight costs seem to be getting much higher than they used to be.
It is just a political stunt for the UK, get a few flags waved.

 

[Buster15]

So. Just to recap. The key government people responsible for delivering Brexit:
Dominic Cummings.
Boris Johnson.
Both compulsive liars. And both unfit for purpose.
Plus of course Nigel Farage.
Honestly. Now we can understand what has happened.

 

[UweBein]

Switzerland ist doing a Schwexit as well - from a EU perspective it's good that we know where we stand now. Let's see what happens in the next 2-3 years when the treaty for engineering products ends (40% of that Switzerland are exporting to the EU).

 

[africanspur]

Switzerland ist doing a Schwexit as well - from a EU perspective it's good that we know where we stand now. Let's see what happens in the next 2-3 years when the treaty for engineering products ends (40% of that Switzerland are exporting to the EU).

Switzerland had a referendum in 2014 to limit EU migration right? Which the government ignored, repeated last year and ended up with a resounding rejection of limiting it.

If only.....

 

[UweBein]

But effectively they got deals which very much mirror the deals that BoJo would have wanted. It's good that these deals expire now. It's also fair from UK's perspective as well.

 

[africanspur]

But effectively they got deals which very much mirror the deals that BoJo would have wanted. It's good that these deals expire now. It's also fair from UK's perspective as well.

Sorry, do you mean that they took that referendum to the EU and asked for changes to be made to their arrangements? What kinds of changes were made?

 

[JPRouve]

I don't really follow the points made. Switzerland abandoned negotiations for a new deal because they failed to find common grounds with the EU.

 

[golden_blunder]

It doesn't have to be like for like though. Is there nothing else the UK could export to Australia?

Yes they have a nice line in Tories which theyd sell for the right price! How about a Boris and a Rees-Mogg combo, 2 for the price of 1, only £50.

 

[golden_blunder]

So. Just to recap. The key government people responsible for delivering Brexit:
Dominic Cummings.
Boris Johnson.
Both compulsive liars. And both unfit for purpose.
Plus of course Nigel Farage.
Honestly. Now we can understand what has happened.

Don’t forget the susceptible people that voted for it

 

[africanspur]

I don't really follow the points made. Switzerland abandoned negotiations for a new deal because they failed to find common grounds with the EU.

My point was that Switz had a referendum in 2014 with a very narrow majority wanting to limit EU migration which, as far as I'm aware, the government ignored.

They then repeated a similar one last year which comprehensively went the other way.

I'm just bemoaning the fact that we couldn't do the same in the UK.

The stuff about the subsequent negotiations I'm totally ignorant about and wanted to learn more.

 

[JPRouve]

My point was that Switz had a referendum in 2014 with a very narrow majority wanting to limit EU migration which, as far as I'm aware, the government ignored.

They then repeated a similar one last year which comprehensively went the other way.

I'm just bemoaning the fact that we couldn't do the same in the UK.

The stuff about the subsequent negotiations I'm totally ignorant about and wanted to learn more.

It wasn't about you specifically but about the Switzerland-EU context. It's not a Schwexit because they are not in and it's actually the issue from the EU standpoint. Switzerland don't want to be in and don't want to formalize their relationship with the EU. The answer from the EU has been that they wouldn't negotiate new deals without it, which led to Switzerland reluctantly entering negotiations that were somewhat framed in 2018 and abandoned this week. So now the situation is that the EU, won't negotiate any new "market acces" deal with Switzerland as they warned before 2014.

In other words from the UK standpoint, what we are seeing here is something that the UK new before the referendum, they were part of the EU and knew what the EU position was regarding future "pick and choose" agreements, that's why I said that I don't follow the points made, this case is a pre-brexit situation not a post brexit one because the entire story and issues started before brexit and even before Cameron 2015 campaign and manifesto.