There is no doubt that the rising beef price has softened the blow caused by the astronomical cost of farm inputs this spring.
Fertiliser, feed, diesel, bale wrap and all other miscellaneous farm costs have increased dramatically this spring, but beef prices have risen to the point where they are now reasonably aligned with the prices paid in our main export markets.
It has taken a long time for this alignment to take place - the challenge now for Irish meat factories and Bord Bia is to retain this relative value for Irish beef in the UK and EU markets.
Looking at the UK first, the fact that there is a deficit of UK beef relative to the market size is an ideal base on which to build a premium.
However, with the UK needing to import beef, nowhere meets their requirement as well as the Republic of Ireland (Northern Irish beef is already classified as UK).
Irish beef has the exact same characteristics, with a steer grass-fed system and a large crossover of processors operating either side of the Irish Sea.
What’s more, closeness to the market is unmatched by any other major exporter and we can fit into the just-in-time delivery requirement of major supermarkets and burger chains.
The challenge in the UK market will arise when it opens up to supplies from Australia and New Zealand
The challenge in the UK market will arise when it opens up to supplies from Australia and New Zealand, as a result of the recent free trade deal.
New Zealand in particular is extremely price-competitive for beef and Australia has made it clear that it is the UK market for imported beef that it is after, which means competition for Ireland.
Our closeness to the market will remain an advantage, but price pressure will be inevitable.
The most dramatic farmgate price increases have taken place in central Europe in recent months.
The Netherlands and Poland are historically well below Ireland for farmgate prices, but even with the recent Irish price surge, they are still well ahead.
This reflects a huge demand for forequarter manufacturing beef, which has also been the main driver for cow beef price.
How sustainable these exceptional prices are will influence the value of Irish beef.
So long as Dutch and Polish beef prices remain around current values, ahead of Ireland, Irish beef should at least retain if not increase its value.
Beef price has been under pressure in Brazil, but the impact on international markets has been tempered by the increase in the value of Brazil’s currency.
Also, with China reopening after the COVID shutdown, demand from that market is likely to recover from its dip in recent weeks.
The USA is processing more cattle than a year ago, mainly cows that are being culled because of drought.
However, it is maintaining exceptional market performance, particularly in Asia, so the additional supply is being accommodated.
In Australia, herd rebuilding continues and while this may in the longer term create a surplus supply, at present it is restricting Australia’s beef export capability.
So far this year, beef prices have kept pace with cost of production increases. This needs to be maintained and the current balance in markets gives the Irish industry a chance to consolidate its place in international markets.