Ireland has developed a beef and a smaller sheep processing industry that is among the most competitive and professional in western Europe over the past three decades.

The other major livestock enterprise is a dairy industry that has developed rapidly since the end of quotas in 2015.

The big difference is the dairy industry provides a reasonable income for farmer suppliers while beef, even in the best years provides a small return to farmers, the source of the raw material for processing.

We are in the middle of a run of particularly poor beef prices

The challenge for a viable beef industry in the next decade is to find an environmentally and economically sustainable way to produce the raw material.

We are in the middle of a run of particularly poor beef prices. If decisions were made on the basis of performance over the past six months, there wouldn’t be a supply of specialised suckler-bred beef.

International trade

As the EU decided to end export subsidies and liberalised access to the EU market, beef produced in Ireland has to compete in the global market space, the same as our dairy, pig, sheep and poultry meat, plus our tillage sector.

We can expect more access for New Zealand and Australian supplies of both beef and sheepmeat

It is difficult to foresee a reversal of that policy, and while the Mercosur countries won’t get access for a few years pending ratification of the Mercosur deal, the likelihood is it will happen because of the force of non-agricultural trading interests.

Additionally we can expect more access for New Zealand and Australian supplies of both beef and sheepmeat as trade negotiations with these countries are progressing rapidly.

It works the other way too, with trade deals broadly in our favour concluded with Japan, Mexico and Canada. But these aren’t enough to offset the access to the EU market for external suppliers.

Growth markets

Access to EU markets isn’t as attractive today as it was a decade ago and in 2030 it will be less attractive again. It is a market with little further growth potential with the exception of eastern European countries.

The world’s major exporters of beef and sheepmeat – Australia, New Zealand, Brazil, Argentina, Uruguay and the US – are all targeting Asia, particularly China (see graph). Japan and South Korea are also major destinations for exports of beef and sheepmeat and, apart from pigmeat, Ireland has not yet had a serious impact on the Japanese market or access to South Korea. Our pigmeat and dairy sectors are, however, well established in these Asian markets.

Meat supply

Pigmeat and poultry production can expand quickly in most regions of the world. Beef and to a lesser extent sheepmeat have a longer breeding and gestation period.

For these grass-based meats, all of the major exporters are close to their maximum production capacity with the exception of Brazil.

Even they, if they remain signed up to the Paris climate accord, will be under pressure to maintain growth in output at anywhere near the levels achieved over the past decade.

In 2005, Argentina was the third-largest net exporter of beef, shipping 750,000t

Political policy and exchange rates have a major impact on the competitiveness of exporters.

In 2005, Argentina was the third-largest net exporter of beef, shipping 750,000t, but because of government policy of taxing beef exports to control domestic prices, this had collapsed to 186,000t in 2015 according to USDA foreign agricultural service (FAS).

However, with a change of government in 2015 and an ending of export tariffs, this is forecast to rebound to 700,000t this year.

With the Argentinian presidential election on Sunday resulting in a swing back to the previous centre-left administration, it will be interesting to see if tariffs are imposed again on beef exports.

Currency

Currency has a huge impact on the competitiveness of any exporting country and here Argentinian beef exports have benefited from a collapse in the value of the Argentinian peso (ARS).

A decade ago there were roughly ARS5 in a euro. By 2015, it took ARS10 to buy a euro and today it takes ARS66.

It is little wonder they can sell rump and loin in the EU for as little as €8/kg.

Other South American currencies have devalued against the euro over the past decade as well but not to this extent.

Irish companies are already well-established in Asian markets for dairy and pigmeat

Ultimately it will be a growing global market over the next decade with limited potential for supply growth.

That should mean a market but it will not be in the EU or the current developed world.

Irish companies are already well-established in Asian markets for dairy and pigmeat and there has been considerable advance preparation by the beef sector as well, with sheepmeat expected to follow shortly.

If there can be a reversal of Brexit or an exceptionally close linked customs and standards relationship plus fast tracking of the Chinese market, Irish beef prices can recover in 2020.

However, even then, external support is required because there is no way the EU will allow the euro value collapse to make exports competitive in a global market place.

The Irish Farmers Journal Save our Sucklers campaign in the spring of 2018 remains an integral part of a sustainable Irish suckler beef industry.