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Last year was one of the strongest years on record, with meat exports totalling €3.8bn, accounting for 30% of Irish food and drink exports. Beef exports grew by 5% to €2.5bn, making up 66% of meat exports in 2017.
Speaking at the Bord Bia meat marketing seminar, Bord Bia CEO Tara McCarthy said: “Population growth, growing consumer affluence and greater demand for meat are creating a long-term opportunity for us, while Bord Bia’s commitments to quality, sustainability and consumer insight mean we have never been better placed to capitalise on them.” The mood at the conference was positive and upbeat.
British consumer attitudes to buying Irish
Bord Bia recently asked more than 1,300 shoppers about their attitudes to provenance and awareness of producers in various markets. It found that half of all British shoppers look to buy British and Irish food. Irish food is considered local by 39% of British shoppers, demonstrating a clear link between Britain and Ireland, which is very important for Irish producers. Meat origin is extremely important, especially for beef, where 80% say it is important. The likelihood of shoppers purchasing Irish beef has increased significantly to 81%.
China the holy grail
Getting access to the Chinese market has been frustratingly slow, but the importance and potential of this market was highlighted by Conor O’Sullivan, Bord Bia’s trade marketing specialist in Shanghai. China can’t produce the food it needs; it has a fifth of the world’s population and has huge issues around pollution. It has been estimated that 40% of the country’s rivers are polluted, with enormous water scarcity in some of the main agricultural areas.
The Chinese appetite for beef is growing fast, with the average Chinese person consuming close to 6kg per year. If this were to go up by 1kg per person, which is likely over the next decade, Chinese beef demand will grow by 1.38m tonnes, which will be filled by imported beef. Fifteen per cent of beef is currently imported, with this likely to grow to 20% by 2020.
China is now the second largest beef importer in the world. It is currently importing from 13 different countries and it is hoped that Irish beef will be in China in 2018.
Unfortunately, beef supply in China is through a complex myriad of dealers and sellers and, by the time it reaches its final destination, its brand proposition is well and truly lost. E-commerce is booming, with mobile money transfers accounting for 23% of all retail transactions in 2017.
This is predicted to rise to 33% in 2020. Online trading of meat is growing at an exponential rate, with huge online trading companies like Alibaba investing heavily in fresh meat online sales.
2017 – the figures
Irish weekly finished cattle supplies in 2017 were up 6.5% or 105,500 when compared with 2016 levels. The Irish kill hit 1.75m head in 2017, up from 1.64m in 2016 and 1.58 million in 2015. Carcase weights declined in 2017 due to a higher influence of dairy-bred stock and especially traditional breed genetics.
Some of this decline could be a result of farmers finishing cattle earlier due to higher meal feeding or finishing for a shorter period due to silage supplies.
Average carcase weight for steers is down from 357.1kg in 2016 to 352.6kg in 2017, a reduction of 4.5kg.
Young bulls are down 3.5kg to 364.8kg. Heifer carcase weights have reduced to 311.7kg, a fall of 1.8kg.
Average cow carcases have dropped to 313.1kg, a reduction of 2.2kg.
In terms of beef supply outlook for 2018, the message from Joe Burke, beef sector manager with Bord Bia, was positive.
As of 1 November 2017, there were an extra 6,500 steers in the 24-month to 36-month age bracket when compared with 2016. These animals would likely be slaughtered in the first half of 2018, pointing to a slight increase in steer supply.
Female beef cattle in the 24-month to 36-month age bracket were up 18,000 head on the same date, pointing to a larger increase in finished heifer supplies in coming months.
Burke said these increases are well short of the increases seen in cattle supply in 2017 and, while the Irish kill will likely exceed 1.8m head in 2018, the current market outlook is good, with plenty of demand for beef, especially on the manufacturing side.
Calf registrations for 2017 are up 30,000, an increase of 1.3%. The big increase came from the dairy side, with suckler calf registrations falling by 14,000 in 2017. The breed make-up of these calves shows an interesting trend. Aberdeen Angus calf registrations are up 11%, while Hereford calf registrations are up by 18%. This is fuelled by the growth in the dairy herd and the increased use of beef bulls on dairy cows. On the other hand, Charolais-sired calves are down 7% and Belgian Blue registrations down 10% in 2017.
This trend is worrying from a farm gate price point of view, and if the decline in continental genetics continues, will it eliminate us from high-priced EU markets?
EU beef production was 1.6% higher in 2017, with strong growth recorded in Poland and Italy. The forecast is for growth to slow to +0.4% in 2018.
2017 live exports
Live exports were the highlight of 2017, with 196,200 head of cattle exported, up 35% on 2016 levels.
Calf exports increased by 40% to 101,800 head in 2017. Weanling and store exports were up 34% to 66,500 head. The big increase here came from Turkey, with 21,568 cattle exported to Turkey in 2017.
Adult cattle exports grew by 20% in 2017 to 27,900 head mainly sent across the border for slaughter.
The live export trade is of increased importance in a year of high calf registrations to underpin the following year’s trade and help maintain the supply/demand balance.
Beef market outlook
Ireland exported 51% (283,000t) of its beef to the UK, 45% (250,000t) to other EU markets and 6% (34,000t) to international markets. To put this in context, we are exporting more beef than the total beef exported out of the EU to international markets. Strong growth in beef exports to Spain, Denmark, Belgium and Italy were seen while exports to France, Holland and Sweden all reduced. Beef exports to the Philippines totalled 19,000t in 2017 up from. Emerging international markets are an important outlet for lower value cuts and also offal. Beef consumption has grown by 2.5% across the EU since 2014, with a slightly reduced growth forecast of 0.5% in 2018.
According to Bord Bia, in terms of beef consumption per country, Germany is up 4.5%, Ireland 2.6% and the UK is up 1.2%. The German consumption increase is seen in the industry as an important one as this is generally a high-priced market for high-value steak cuts.
Comment Adam Woods Decision time for suckler sector
Having attended Bord Bia’s Meat Marketing Seminar, you could only come away feeling positive about the Irish beef sector. Record volumes, record exports and growing global consumption, all ingredients for a successful 2018.
The seminar was attended by 150 of the who’s who of the Irish meat sector with many CEOs there to hear market insights and what the Bord Bia experts had to say. The morning session was one of the most informing conferences I have attended in a while, well chaired, on time, with a slick professional delivery. The presentations went down very well, with all industry clapping encouragingly after each presentation, and why wouldn’t they? Growth in international markets meant growth in profits for most people in the room. Leaving Naas that afternoon, I thought to myself how lucky I was to work in an industry that finally had a positive story and was finally going places. China nearly across the line, a record kill, growing global markets and no price cuts – who could complain about that.
Cattle finisher
On the way home I called into a farmer in Co Westmeath. John farms 180 acres; he is a cattle finisher, finishing 200 animals, 100 in the winter and 100 in late summer/autumn. Having walked around the yard and discussed where things were at with the farming business I lost my Bord Bia buzz very quickly. He purchased 42 steers at 530kg in September at €2.27/kg or €1,203/head, good-quality Charolais steers born in autumn 2016.
Haulage and purchasing costs amounted to €30. Health costs equate to €11. Feed costs are €2.70/day on average since purchase totalling €330. Thirty were slaughtered in early January. They gained 150kg since purchase and killed out 360kg at €4.20/kg (R+,3=) or €1,492 allowing €20/head for haulage and slaughtering costs.
This was prime beef, quality assured, under 30 months, continental animals. He needed €4.37/kg to break even. Total revenue: €1,492-€1,574 = -€82. This isn’t allowing for fixed costs, slurry spreading or interest on money borrowed. He invested €36,090 last September on these cattle and a further €10,530 on costs, adding up to €46,620, to realise a loss. If sheds were left empty, and money left in the bank, he would be €2,460 better off today.
Bord Bia is developing a strategy for the Irish meat industry for the next five years. John is wondering where his strategic guidance is for the next five years. Hoping for the best is what has been happening but patience is starting to wear thin. Bord Bia meat marketing couldn’t be further from this man’s thoughts.
Hugely successful
As an industry, we have been hugely successful in positioning ourselves to be world players in terms of beef exports.
However, at the primary producer stage, farmers have been failed and until the industry realises this, specialist quality beef producers will continue to decline and our beef processing requirements will be more and more taken as a byproduct from the dairy herd.
John has two sons finished college. Neither has any interest in going farming at the moment and unfortunately John doesn’t see any point in encouraging them.
Likely cuts in the next CAP budget with follow on reductions in BPS payments may decide the future of suckler beef production in Ireland. As a collective industry we need to sit down and decide do we need suckler beef production, do we want it or should we just let it go.
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