It has been a strange year in the Irish beef industry. All the ingredients were there for farmers and factories to be at loggerheads on price – volatile exchange rates, increased volumes of cattle and poor weather diminishing farmers’ negotiating power.

However, despite conditions that would appear to favour a price slide, they tended to remain steady. Even with the kill continuing to increase as the year progressed, there was little downward pressure on the base price.

For the first time I can recall, we saw beef prices increase twice in September when the weather was poor and the kill was rising. The same was true in November and December when the response to a 40,000-head weekly kill was for prices to firm.

So what changed over the last 12 months? While there were a number of factors at play, the Irish beef trade ultimately reflected the positive supply and demand balance in the EU. Once again we see the direct correlation between the state of the economy and meat consumption – with growth returning to the eurozone, so too has demand for meat. This increased demand came as beef production within the EU remained stable despite the increased throughput at Irish plants.

Meanwhile, we also saw EU exports of live cattle perform strongly in 2017, trending 5.5% higher than the already high figures recorded in 2016. This was largely fuelled by demand from Turkey, Lebanon and Israel.

Against a backdrop of steady EU supplies being met with increased demand across member states and higher EU live exports, we also saw beef exports from the EU increase 25% in 2017 – this comes on the back of strong exports in 2016.

Again, this was influenced by factors far away from Irish shores, with a downturn in beef exports from Australia and high domestic demand in the US. It is interesting to see the increase in exports from the EU to Hong Kong, which gives us some insight into the potential that the opening of the Chinese market would present for Irish beef. It is widely envisaged that there will be positive developments in this regard in early 2018.

Demand from China

The EU beef market has also benefited from upward price pressure that strong demand from China created in the global pigmeat market. When pigmeat prices are high, retailers are not in a position to displace beef sales with half-price pork loins and pork chops. A strong pigmeat market in 2017 helped maintain retail beef sales throughout the EU. In this sense it is encouraging to see meat consumption within the EU increasing despite a sharp drop in promotional activity at retail level.

But one of the biggest factors driving the trade over the past 12 months has been the improvement in carcase mix – the combined value of the carcase when all the cuts and offal products are taken into consideration. Irish meat processors have become much more advanced in the harvesting and marketing of offal. This has coincided with an increase in global demand for such products and better access to global markets.

However, the “beauty burger” is probably one of the biggest factors in increasing the overall value of the carcase. While first evident in the market in 2016, we have seen gourmet-style burgers become more prevalent on the menus of high-end restaurants in 2017, particularly in London. The subsequent increase in demand for high-quality manufacturing beef has a major bearing on overall carcase value. While the focus is often on the value of steaking cuts, in relative terms they account for a small percentage of the carcase. In contrast, up to 50% of the carcase can be channelled into the manufacturing market and therefore even a slight price increase has a major bearing on carcase value.

Manufacturing trade

It is likely that as retail demand shifts from steaking cuts to mince in January, in line with consumer focus turning to paying credit card bills, we will see a further strengthening in the manufacturing trade in 2018. Forecasting markets beyond the new year is difficult given the extent to which the EU beef market is exposed to global market forces. However, with a further increase in volumes of cattle due to come on stream in Ireland, all eyes will be on how quickly Minister for Agriculture Michael Ceed can secure beef access to the Chinese market.

The ambition has to be getting real value into the specialist steer beef product that is the anchor of our suckler industry. Factories have achieved best in class on cows – let us make 2018 the year when that success is repeated with steers.