DEAR SIR: Your recent article ‘Food Harvest 2020 – verdict for beef’, determined that the Government’s 10-year strategy for Irish agri-food and fisheries, Food Harvest 2020 (published in 2010), has failed in its ambitions for the beef sector.
Bord Bia fully acknowledges that there are considerable challenges within the beef sector, especially around farm profitability. However, progress has been made by the sector in the decade 2010-2020, and a future remains for beef production in Ireland.
Below, we provide an update of the analysis presented last week that looks at the full decade covering the period 2010 to 2020:
Target: Increase of 20% in the value of output
The Food Harvest 2020 target of an increase of 20% in value of total output is based upon using the average of the years 2007 to 2009 as a baseline. However, last week’s article compared Irish cattle prices across the decade against UK and EU prices. A fair and accurate assessment of this Food Harvest target should compare 2020 Irish output against 2007-2009 output. Using average R3 steer prices as a metric for the value of output, prices have risen by 24% since 2007-2009 (from €2.93/kg to €3.63/kg).
Target: Close price differential between Irish and other competitors
The Bord Bia beef market tracking tool was one of the measures agreed during the Beef Market Taskforce talks of September 2019 to improve price transparency. The tool creates a weighted export benchmark price for cattle in our export markets to compare Irish cattle prices against.
To obtain an accurate price comparison, the export benchmark price can be compared to a weekly weighted Irish composite price made up of the price per kilo paid for all cattle slaughtered in Ireland. This shows that Irish composite prices were at or above the export benchmark for six of the past 10 years (2010-2020). Prime Irish cattle were also at or above the export benchmark price in six of the years between 2010 and 2020.
Target: Position Irish grass-fed beef as premium in US
The above target as featured in the article does not reflect the actual target as set out in Food Harvest 2020. The document instead said that, given the potential to position Irish grass-fed beef as a premium product in US markets, developments with regard to market access should be continually monitored. Market access was gained in 2015 and beef exports to the US were valued at €34m in 2020.
Target: Position Irish grass-fed beef as a premium product in EU markets
Food Harvest 2020 specifically called out the need to reduce the price gap between Irish beef and premium products in EU markets. In Germany, the Netherlands, Belgium and Italy, Irish beef is now, by and large, sold at a premium to local product, reflecting the success of this ambition. Other grass-based suppliers such as Argentina and Uruguay have a long history of being positioned as premium and grass-fed, meaning they can achieve similar premiums to Irish beef.
In the UK, Irish beef is positioned as much as possible within the ‘British and Irish’ segment of the market with major retail and food service customers. Although a number of UK retailers adopt a British-only sourcing policy, several key buyers continue to regard Irish beef as equivalent.
Finally, comparisons were made between the average export price per tonne achieved by Irish beef between 2012 and 2020. However, last week’s figure of €1.9bn in 2020 excluded offal and value-added meats whereas the 2012 figure it was compared to included both. The comparable figure for 2020 should be €2.27bn, an increase of over 19% on 2012.
Notwithstanding the considerable challenges facing the sector, the past decade provides some optimism for the future direction of the beef sector.
Bord Bia’s marketing strategy for Irish beef is to maximise the value returned from the market by targeting the world’s best-paying customers. Successfully achieving this requires verifiable selling points that allow us to differentiate ourselves from competitors. To this end, initiatives such as the Grass-Fed Beef Standard and the PGI application for “Irish Grass Fed Beef” are vitally important in providing potential points of difference and momentum for growing the value returned from the market.