Opportunities for Irish beef in Czech Republic

By Peter Young

The Czech Republic is one of the new member states that joined the EU in May. The third largest country to join, it would appear to be one of the more developed. More importantly for Irish beef farmers is has already become an importer of Irish beef.

On a flying visit to the Czech Republic for the launch of the first every co-branded Irish beef promotion, I looked at some of the changes in the country since it went about joining the EU.

Life is good in the new EU

Where are all the animals? Driving past hills after rolling hills, all you can see in the countryside is acres of maize ready for harvesting, stubbles waiting for the next crop and the odd field of potatoes. Any pasture was used to cut silage or hay. All stock were indoors.

With an average farm size of 100 hectares the Czech republic does not have the inherent farm structure problems, than say it's neighbour Poland has.

Beef is only a by-product of the dairy herd. Of the 662,000 cows over 90% are dairy cows and that's even after the 50% fall in dairy cow numbers since 1992. Most of the agriculture is carried out in co-operative or recently formed limited farms with an average area of 884ha.

The farm we visited was an old co-operative farm that had followed the recent trend and formed a limited company. With 3,800 ha in total the enterprises included dairy, beef, pigs, potatoes, grain, and rapeseed.

Since losing the communist shackles dairy cow numbers went from 500 to 900, while worker numbers have dropped from 300 to 140 and will probable fall more.

The livestock manger says life within the EU has been good so far. Milk prices have stayed stable at 26c/l but beef prices have risen. Exporters are keenly offering €2/kg liveweight for young heifers and bulls weighing 250-300kg. The live animals end up in German or Austrian feedlots with Holstein bull calves head for Italy. Beef bulls brought to 600kg liveweight are offered 240c/kg carcase at slaughter.

Of the 900 dairy cows 800 are the traditional breed Flevich. The dual-purpose breed has similar characteristics to milking Simmentals and has good beef shape. Like most stock they spend their lives indoors. The Flevich cows produce 7,100 litres at 3.48% fat and 4.15% fat. The 100 Holsteins on the farm yield 10,500l at 3.20% protein and 3.9% fat.

All calves have the double tags and a sign with the European flag is prominent on a few buildings. It signifies funding the farm received to develop some of the buildings. After the massive jump cow number will remain stable. Additional investment is planned in the dairy where it is currently taking 6-7 hours for each milking to put 900 cows through the two parallel six-units double up milk plants.

Retail revolution offers opportunity

"Queuing for beef or any meat went on for hours. It was easier to just go and pick the mushrooms that were growing in the forest". When Marek Novotny started reminiscing about his childhood under the communist regime you realise the massive changes that the Czech people and everyone in the Eastern European countries have undergone in just over a decade.

Marek works for Animalco the company who are distributing Irish beef to supermarkets, a sector that has undergone huge changes.

After the fall of communism the retailing giants of Europe "invaded" the country. Kaufland from Germany, Hypernova from Holland are the main players but Tesco from the UK, Carrefour from France, Delvita owned by Belgium group Delhaise and Spar Austria as well as the discounters are all battling it out in a cut throat market.

Czech consumers now have the greatest choice in Europe as varying groups built hypermarkets and supermarkets, sometimes within a stones throw of each other.

Delvita, the chain that is working closely with Bord Bia on the promotion is trying to set itself apart by specialising in food particularly in the area of fresh food. They want to be the Superquinn of the Czech republic.

"Consumers demands are changing rapidly", said Patrick Verhamme, Commercial Director, Delvita. "Traditionally, people only ate meat in goulash. It didn't really matter what type, it was just a carrier for the sauce". In the supermarket we visited the largest queues were for processed meats. Pork was the stable meat in the past but chicken sales have mushroomed by 70% and consumption is now 30kg/head/annum, equivalent to pork. Beef is lagging behind at 8-10kg/head and the lamb consumption is tiny.

"It's a lot to do with price," explained Patrick. The biggest seller is whole chickens and processed pork meat available at €2.50/kg. On the fresh meat counter chicken breasts were selling for €4/kg and pork cutlets for €5.30-6.20/kg. On the beef side the Irish beef was on promotion for €6.20 but normally sells for higher that the local beef (see table 1). Bio beef, a national organic type brand is sold for the highest price.

The problem for Patrick is that you have to buy the whole carcase of Bio beef. Beef is a by-product of the dairy industry so consistency of all Czech beef can be a problem.

"Irish beef is much more consistent and has a better choice of cuts. The company buys topsides and gets them cut in the supermarket, greatly reducing the losses".

Consumer research, carried out by Bord Bia has shown that Czech consumers view consistency, colour and age of animal as the most important considerations when choosing beef. Ireland was found to have a positive, natural image suggesting fresh organic products.

The hope for Delvita and Irish farmers is that as consumer spending rises, the demand for specific cuts and higher quality beef will increase.