Irish beef producers have this year enjoyed beef prices last seen in 2013 but the reality is that in recent weeks they have failed to keep pace with increases in the EU 27.
They also lag behind Australia and Uruguay and while the US price of €4.09/kg equivalent is technically below the Irish R3 steer price of €4.16/kg, that is for a 60% killout.
This is worth an extra 5% in value, which brings the equivalent US steer price close to €4.30/kg.
New Zealand’s beef price, as reported in the Farmers Weekly, is slightly below €4/kg equivalent with only Brazil on the equivalent of €3.28/kg and Argentina on €3.58/kg equivalent.
Beef prices received by Irish farmers have been second rate compared with those received by their counterparts in Britain and Northern Ireland for several years.
The basis for the premium UK farmers receive for their beef is the fact that the UK consumes more beef than it produces and UK supermarkets are particularly loyal to using UK beef in their retail offering.
Only Tesco and Sainsbury’s continue to list Irish beef and, even then, it is a small percentage of their offering
This position strengthened further during the pandemic as demand switched from food service and hospitality to home consumption for which beef is now mainly sourced from supermarkets in the UK. Only Tesco and Sainsbury’s continue to list Irish beef and, even then, it is a small percentage of their offering.
This strong domestic demand has driven the price of R3 steers in Britain to the equivalent of €5/kg and €4.74/kg equivalent in the North, prices unmatched anywhere in Europe apart from Sweden where the R3 young bull price is on par with Northern Ireland.
Dramatic surge in EU prices
Though quotes are up this week, Irish R3 steer prices have fallen back from the peak of €4.28/kg at the end of July and flatlined between €4.16/kg and €4.18/kg in recent weeks, they have surged ahead in mainland Europe.
It is not just Poland that has recorded a huge increase in prices over recent weeks
Nowhere is this more dramatic than in Poland where R3 young bull price is the equivalent of €4.30/kg, 14c/kg better than the Irish R3 steer price, having been 87c/kg behind the Irish price as recently as the middle of July!
It is not just Poland that has recorded a huge increase in prices over recent weeks. Similarly, €4.25/kg was the R3 young bull price in the Netherlands for the week ending 20 November, 10c/kg better than the Irish R3 steer price having been as much as 75c/kg behind the Irish price at the end of May.
Germany and France are frequently ahead of the Irish price with Germany on €4.64/kg for the R3 young bull 48c/kg in front of the Irish price, while France at €4.30/kg is 14c/kg better. Italy is an outlier at €3.83/kg for R3 young bulls even though it is at €4.31/kg for R3 heifers and €4.22/kg for U3 young bulls.
Examination of market price data at a single moment in time can be misleading and conclusions on market performance should be drawn on trends over a prolonged period.
On that basis, it is safe to conclude that Irish prices appear destined to be second rate compared to the prices paid for the same product in Britain.
Even with sterling strengthening considerably against the euro, the gap is at 84c/kg at present.
It will take several more weeks’ data to see if the reversal of Ireland’s relative price to Poland and the Netherlands remains
With Irish beef accounting for up to 80% of UK beef imports, the winners are the UK burger chains, wholesale and limited supermarket buyers that get the same product at a much lower price.
It will take several more weeks’ data to see if the reversal of Ireland’s relative price to Poland and the Netherlands remains and Australia’s €4.89/kg is retained when herd rebuilding is complete.
However, with the Irish R3 steer price as close to the price in Brazil as it is to the price in Britain, it is clear that despite the welcome improvement in farmgate prices, Irish beef remains as much a commodity product in 2021 as it ever did where prices are concerned.