At the start of the last decade, a blueprint was set out for Irish agriculture under Food Harvest 2020 and this was revised and updated at the midpoint in 2015 under Food Harvest 2025.
With the data now available for 2020, it is timely to review how Irish beef has performed compared to the ambitions at the start of the decade and updated in 2015. The R3 steer grade has been used when comparing prices with the UK and the R3 young bull has been used when comparing with France and the EU average as young bulls are the predominant male beef animals in the rest of the EU. O3 cows are also included in the review
The top line ambition for Food Harvest 2020 was to increase Irish agri-food exports by 42% on the three-year average from 2007 to 2009 to €12bn. This was achieved by 2017 and food exports have reached €13bn or better for the past three years.
Growth has been driven by the dairy sector, with exports hitting €5.2bn in 2020, whereas beef exports stood at€1.9bn, a level achieved in 2012. On export volumes, the €1.9bn of sales in 2012 were achieved on exports of 445,000t whereas it required 550,000t of beef in 2020 to generate sales of €1.9bn (Bord Bia Performance and Prospects report).
In simple terms, the value of Irish beef exports averaged €4,270/t in 2012. That value has since diminished to an average of €3,455/t in 2020 – a loss of more than €800/t in the value of Irish beef exports in the last eight years.
Target: Increase of 20% in value of output
We have examined the performance of the Irish beef sector against the ambitions of Food Harvest 2020 across three specific categories:
Figures 1 to 3 show the average prices paid each year based on weekly returns to the EU across these categories.
The growth target set in Food Harvest 2020 was 20% in value of output. At the end of the decade, this hasn’t been achieved in any of the three categories examined, with the target just met for one year (2013) on R3 steers. Irish O3 cow prices were actually lower in 2020 than in 2011 at €2.84/kg compared with €2.91/kg in 2011.
Target: Close price differential between Irish and other competitors
Irish R3 steer prices started the decade 13c/kg behind the UK but by 2020 this had grown to 38.3c/kg (Figure 1) or €150 per head on a 390kg steer. This gap reached as high as €1.14/kg, in November 2015, almost €450 per head on a 390kg steer. The exchange rate is a factor in the differential. At the start of 2011, a euro was worth 84p. When the differential was at its widest, the euro was trading at just over 70p while it has been in the range of 88p to 92p over the past couple of years.
Young bulls are chosen for comparison with the EU as very little steer beef is produced on the continent (Figure 2).
France and Italy are two of the highest-value markets and for much of the decade Irish prices have kept pace with or been ahead of French prices. However, for the past two years, French prices have been significantly stronger.
O3 cows (Figure 3) is the one area where Irish prices have been competitive with both the UK and EU average consistently over the decade.
Target: Position Irish grass-fed beef as premium in US
Market access was secured in 2015 but has been slow to develop as a volume market. Last year saw a doubling of product imported to 10,000t, according to USDA import figures, but this was mainly forequarter manufacturing beef and trimmings. This sector is dominated by Australia, New Zealand, Canada, Mexico and at the end of the decade Brazil.
Verdict: May yet develop but so far Miss
Target: Position Irish grass-fed beef as a premium product in EU markets
This challenge has been made difficult by many supermarkets, especially in France where there is an extremely nationalistic approach to sourcing beef.
If the benchmark for this was set by comparing Irish steer beef prices with Polish young bull beef prices, then Irish beef has a premium position in the EU.
If the comparison is Irish young bulls with French or Italian young bulls, then we are lagging behind at the end of the decade.
Also, in German or Dutch supermarkets where Irish beef is carried, Argentinian or Uruguayan is often as strongly priced as Irish.
Verdict: Hasn’t happened in the past decade, may still do if PGI grass-fed campaign works. Miss
Target: Government and Bord Bia open target markets
Access has been secured to the US and China, the two largest beef importers in the world, and business has been developing in other international markets such as the Philippines and Japan, aided by a recent trade deal. Agricultural attachés have also been appointed to a range of Irish embassies and Bord Bia has a strong global network of offices feeding back market intelligence.
Verdict: Everything that could have been expected has been done. Hit
Target: Encourage market-led production systems for young bulls from beef and dairy herds
Given that the number of young bulls presented for slaughter in Ireland in 2020 was 40,000 less than 2011, just 6.9% of the total kill compared with 11.6% in 2011, it is clear that young bulls aren’t wanted by Irish factories. It also means that a market hasn’t been developed for this type of beef production over the past decade and therefore the sector is unable to avail of the increased efficiency of bull beef production over steer beef as aspired to in Food Harvest 2020.
Target: Competitiveness, technology and knowledge transfer
Huge efforts have been made between Teagasc, ICBF and the Irish Farmers Journal Better Farm programme to create and demonstrate a pathway to the most efficient beef production systems. Results have been variable and while there are several examples of where huge progress has been made in on-farm efficiency, the reality is that many farms haven’t progressed. Considerable emphasis was put on this in Food Harvest 2020.
Verdict: remains A work in progress.
For the first three years of the past decade, farmgate prices continued the upward trend that had been in place for the previous three years.
However, 2013 was the high point and the past two years have seen the lowest R3 steer price since 2011.
Since then it has been a downward trend and no matter how we reflect on it, Irish beef producers are in a worse place at the end of the decade than they were at the start of it.
We might have hoped with the big three Irish groups now also having a dominant position in Britain that Irish farmers would by now be getting prices close to their UK counterparts.
That hasn’t happened and the harsh reality is that with Farm to Fork being the platform for delivery of the next CAP, Brexit and the EU open for beef imports from across the world, the outlook for the next decade is also bleak.
To have any hope for economic sustainability, Irish farmgate prices need a stepped increase, similar to what happened at the start of the last decade.
Perhaps a grass-fed PGI will be the tool that delivers the premium that has been elusive over the past decade.