The annual beef factory leagues in the Irish Farmers Journal give an insight into where the best and worst prices were paid in 2021 across 16 grades of steers, heifers, young bulls and cows.
As is common with statistics, they tell only part of the story though the price farmers receive is by far the most important part.
For a start while there are potentially 225 individual grades, in practice the vast majority fall into the U, R and O3s and 4s with Ps featuring in cull cows going to the factory straight from the parlour. That means grades at the margins are more likely to be distorted because of relatively small numbers.
Prices also send a message. If reported prices are for example particularly low for young bulls at a specific factory, that is a clear message that they don’t want young bulls or have probably received very few at the low reported price, which will make the low price paid stand out when the year’s totals are put together.
Still a good mix of independents
The leagues also show that there is a vibrant processing sector outside the main groups. No doubt ABP, Dawn and Kepak all have a range of blue chip customers that makes them competitive as organisations when their combined results are analysed.
However, when we look at individual performance, we can see that out of the 16 possible top league positions, 13 were claimed by factories outside the main groups.
Foyle took eight of these and they are something of a hybrid in that they have only one factory in the tables, they also have two factories in the north and two in England.
The bottom line is to make sure that cattle for sale are matched with the factory that most wants to buy them
They are also among the most demanding when it comes to weight range and securing top price at Foyle means having to fit into tighter specifications that many other factories. In fact for farmers with a batch of cattle outside general specifications, the best place to sell may well be factories lower down the leagues.
The bottom line is to make sure that cattle for sale are matched with the factory that most wants to buy them.
While ABP, Dawn and Kepak handle approximately two thirds of the cattle killed in Ireland, the industry is nowhere near as concentrated as it is in the US.
There the Biden Administration is in ongoing dispute with the factories, blaming them for using their dominant position to cause inflation. Four factory groups in the US control 85% of the cattle kill and the administration is determined to grow the independent sector.
The US structure has been in place for decades and it is ambitious for government to try and reverse the trend now. In Ireland on an individual basis, independent factories are competitive, it is when they are grouped together that their combined strength doesn’t match the combined strength of the main groups.
Exceptional performance on cow prices
Irish farmers are consistently frustrated at having to take 50c/kg to 60c/kg and at times more less than the equivalent beef is making in Britain. This is because of the premium British-branded beef commands in its home market. The Irish product is at least as good and sold alongside the British in supermarkets but farmers get less money.
However, when it comes to cows, it is a different picture.
Factories outside the main groups are particularly competitive in this sector
In the early part of 2021, Irish O3 cow prices trailed their counterparts in Britain by 25c/kg to 30c/kg but by the final quarter of the year Irish cows are actually 20c/kg ahead of British cows. Factories outside the main groups are particularly competitive in this sector and within the groups, Dawn and Kepak have strong burger businesses alongside their retail trade, while ABP are retail focused.
Farmers are always concerned when an independent factory is taken over by a large group.
Slaney was a high-profile acquisition by ABP bringing their total to seven while Dawn added the Slane factory bringing their total to five. Kepak are on four since they decided to close the Clare plant.
While farmers fear consolidation, a factory at every crossroads isn’t the answer to beef price. There is a place for larger groups that can compete with large customers as equals. Ideally this is complemented by a strong independent sector and the leagues show that is the case in Ireland.
It will be interesting to see what happens in 2022 as two new price reporting factories joined in 2021. They were excluded because they weren’t reporting for the full year but first indications are that they will be competitive too in the current year.
The factory leagues show that we have quality transparency at the farm gate end of the chain, what is needed now is the same at the factory gate end. That will be the challenge for the Ombudsman whenever the appointment is made.
Listen to the editor of the Irish Farmers Journal Justin McCarthy who established the leagues back in 2006 debate the changes that have taken place in intervening years with Phelim O’Neill.