The annual gathering of UECBV, the EU association representing meat processors and livestock traders, was held in Dublin this week.

The recurring theme from the presentations was the extent of the challenge facing grass-based livestock from every possible perspective, starting with primary production through to the market.

Deputy director general at DG Agri Michael Scannell emphasised that farm-to-fork is here to stay as the basis for EU agriculture policy, but also contended that food security remained at the heart of the current CAP.

The issue of reconciling production with sustainability and environmentalism was a recurring theme of the event.

Professor Thia Hennessy from the Cork University Business School concluded that food production is both a “culprit and victim in the debate, but ultimately need to be compatible".

Achieving this, she said, would be through science, technology and knowledge transfer, which would take us a good part of the way, but added that some reduction was also part of the solution.

Market forces

Meat director at Gira, a leading international meat consultancy, Rupert Claxton acknowledged that the demands on producers and processors in Europe will add “cost and complexity to EU meat production” and will, in turn, lead to reduction in production.

The dilemma being faced is that “increased cost of production is real and on top of current highs”, yet consumers are unwilling to pay either directly or indirectly.

The affordability of red meat was identified as the single greatest challenge in retaining consumer loyalty to an increasingly expensive product.

As well as cost being a barrier to consumption, there is also a challenge from increasing 'flexitarian' diets.

The number of EU consumers that adopt vegan or vegetarian diets remains relatively small, but it is clear that many consumers are choosing to eat less meat.

When they do, there is an increasing inclination towards poultry meat, because it is relatively cheap and considered a healthy meat.

Analysis

There is no disputing that the European red meat market is at best stagnant and probably trending downwards slightly. Parallel to this is a downward trend in production that is encouraged by EU and national government support policies.

The CAP, which takes effect from the beginning of next year, is strongly focused on the environment and measures to reduce emissions.

Neither beef nor sheepmeat values have increased to a sufficient level to absorb the additional production costs for winter finishing

Foremost among these is the encouragement of organic farming and rewetting, which will either remove land from production or dramatically reduce its capacity.

Alongside this is the escalation of costs in producing grass-based livestock and livestock products.

While dairy prices have increased to absorb the extra costs of production, neither beef nor sheepmeat values have increased to a sufficient level to absorb the additional production costs for winter finishing.

While beef prices are expected to increase from current levels, there is little indication that €6/kg will be delivered next spring. This is considered the basic level required for farmers to recover their costs.

The reality is that North America and Australian grain-fed beef, assisted by growth hormones, will achieve a level of competitiveness beyond the reach of Irish and EU farmers.

South America has an abundance of grass in a very productive climate, even without rainforest clearance, and will always be the most cost competitive.

EU policy is likely to succeed in reducing emissions as further reduction in output is inevitable. However, with world demand for red meat growing in Asia and in Africa, it will be produced with or without Irish and EU farmers involved.