Irish sheep farmers enjoyed record prices in 2021 and after a slow start, beef prices climbed to levels only seen once before in 2013.

Pig farmers have had a turbulent year and, for dairy farmers, it was steady if unspectacular.

The value of Irish beef exports increased by 11% between January and September 2021 to €1.531bn though the volume exported was down slightly at 348,805t.

There was a substantial drop in volume to the UK, no doubt influenced by stockpiling ahead of the UK leaving the single market at the end of 2020 and the EU-UK Trade and Cooperation Agreement not secured until Christmas Eve 2020.

Also, the catering and hospitality sector was shut in the UK for much of the first half of 2021 because of COVID-19 and this is the main market for Irish beef exports.

Unsurprisingly sales to Asia were down with the loss of China

There was a big increase in beef exports to France, up 33% to 37,862t in the first nine months of 2021, but the most spectacular growth was to Sweden, where volumes more than doubled to 18,866t.

Unsurprisingly sales to Asia were down with the loss of China, and the US and Canada continue to disappoint with sales there down 19% to less than 8,000t between January and September.

Outlook

The FAO is forecasting an increase in global beef production of 1% in 2022 as the Australian herd rebuild continues and volumes increase in Brazil and India.

Global trade is also forecast to increase by 2%, driven by Asian demand. Brazil will continue to be the world’s largest beef exporter, accounting for 20% of all beef traded.

Brazil has increased exports to the US and Russia is also a target for 2022

Up until September this year almost half of this went to China but, with the BSE suspension until 15 September, Brazil has increased exports to the US and Russia is also a target for 2022 as they have suspended import tariffs for 300,000t of meat quota.

The gap in Chinese imports has been partially filled by the US and Argentina and Brazil exports are expected to resume at full capacity early in 2022.

A Brexit angle

Beef supplies will increase in Australia, particularly in the second half of 2022.

Scarcity of supply in 2021 meant that the loss of beef exports to China had minimal impact but it will become an issue when volume is restored and Australian beef exports return above 1m tonnes annually.

It is also likely that the trade agreement between the UK and Australia could come into effect in 2022, at which point the UK would become a very real option for increasing beef supplies with corresponding negative consequences for Irish beef exports to Britain.

The USDA is forecasting that US beef exports will be down 4% in 2022 due to a 3% drop in production caused by tighter cattle supplies in the US going into the new year.

This could create some opportunities for Irish beef in Japan and, indeed China, if we were to succeed in getting the import suspension lifted. This was achieved by Brazil on 15 December.

Dairy exports for the first nine months of 2021 were down 4% in value to €3.697bn and down 12% in volume to 1,138,306t.

As with all other sectors of Irish agri-food exports, sales to the UK in the early part of 2021 were distorted by stockpiling in advance of Brexit coming fully into effect on 1 January. Similarly, catering and food service outlets were lost due to COVID-19 shutdown. This meant that the volume of dairy exports to the UK was down 23% to 264,924t, with butter down 7,104t (27%), cheese down 11,509t (14%) and milk and cream down 48,533t (32%).

Outside of Europe, dairy exports to Africa and Asia increased by 4%

Sales to the EU were also down by 19% in volume to 432,332t and 14% in value to €1.152bn. The biggest drop was sales to the Netherlands, which were down 36,389t (17%), France was down 16,399t (36%) and Belgium was down 8,718t (33%).

Outside of Europe, dairy exports to Africa and Asia increased by 4%, while the best growth in export performance was delivered by North America.

Though this remains a relatively small volume market, taking just over 5% of total exports, it is a high-value market accounting for 10.5% of the total exports value.

Outlook

Continued weaker milk supply has seen most commodity prices firm further. Indeed, supply-side fundamentals all point to a strong market in the short and medium term.

Next year, Chinese demand and weaker global milk flows will be the significant market factors. However, the market is likely to be strong for the first half of 2022. On the production side, rising costs will impact on supply as energy, fertiliser and feed costs increase substantially.

Looking ahead, EU and UK milk might be just about on a par with 2021 in 2022

EU collections are slightly ahead of previous years to date, but are falling.

News of the Dutch plan to reduce cow numbers will also impact flows into next year and beyond.

Looking ahead, EU and UK milk might be just about on a par with 2021 in 2022.

The two other global players worthy of mention – the US and New Zealand – are unlikely to increase production in 2022 either.

In the US, higher input costs are already biting. In New Zealand, weather and costs are also impacting production. It is hard to see supply affecting prices negatively in the short term.

The drop in supply from 55,369t in January to September 2020 to 50,183t in 2021 no doubt helped contribute to what was an exceptional year for sheep farmers.

While recent years have seen a redirection by New Zealand away from European markets to Asia, China in particular, the past year has also seen changes in Irish sheepmeat exports this year.

Sales to the UK fell to 10,016t in January to September 2021, a drop of 2,362t or 19% on the same period last year, while sales to France fell from 16,879t to 14,360t, a drop of 15%.

Germany continues to increase in importance with the volume increasing to 6,831t in 2021 from 6,195t last year, a growth of 10% when there was a fall of over 5,000t available for export.

North America was showing some progress, increasing from 903t in 2020 to 1,110t in 2021.

Outlook

The indications are that New Zealand will remain focused on Asia and North America in the year ahead and that the EU market will continue to be under supplied.

The EU outlook for the decade ahead takes the view that sheepmeat, being a minority consumer product, is less sensitive than the high volume meats and therefore demand will remain stable or increase slightly.

A breakthrough has been achieved in getting access to China and the US in 2021 for Irish sheepmeat and both these markets have potential for sales in 2022. However, given that they are well supplied by Australia and New Zealand, Irish volumes are likely to be small but with high value.

Expect continued diversification in EU markets to complement the higher volume markets of France and the UK.

The most notable feature of Irish pigmeat exports is the fall in value and volume to the UK and surge in exports to China, now making it our top market for both volume and value.

Sales to the UK plummeted between January and September 2021 to 23,728t product weight (PW) compared with 41,242t PW in the same period in 2020.

In contrast, sales to China were up 20% to 98,902t, Japan was up 38% to 9,445t and Australia was up 44% to 12,768t.

Overall pigmeat volumes exported were just under 1,000t higher in 2021 than they were in 2020 but the value increased by 12% to €298m.

Outlook

With China importing 40% of all the pigmeat that is traded internationally, and taking 43% of Irish pigmeat exported between January and September last year, what happens there will have a large bearing on the global pigmeat trade.

The collapse in value of pigs in China in 2021 has led to the liquidation of pig herds and is likely to tighten supply of slaughter-ready pigs according to the USDA’s Foreign Agricultural Service (FAS).

FAS is also forecasting global trade to increase by 2% in 2022

It estimates its production in 2022 will fall 5% on 2021 to 43.8m tonnes carcase weight equivalent (CWE) and global production to be 2% lower at 104.2m tonnes.

FAS is also forecasting global trade to increase by 2% in 2022 with 12.8m tonnes CWE traded and Chinese imports to increase from 4.5m tonnes to 4.750m tonnes with increases also in Mexico, Japan, South Korea and Hong Kong.