Up to €150/head price difference between beef factories

Irish farmers could earn or lose up to €150 per head on their cattle in choosing the factory where they kill their cattle. According to analysis of prices paid at Irish factories by the Irish Farmers Journal for every animal bought in 2019, there is a 38c/kg difference on the price paid for a U=3= young bull between the top and bottom factories. When this is applied to a 395kg carcase, it amounts to €150 per head

It should be pointed out that the biggest differences in prices paid are more common in the extreme grades and where factories don’t buy a category of cattle as a matter of policy. We don’t have access to the individual cattle kill at individual factories but we can assume that, in some cases, tiny numbers are killed which may also explain a huge price-per-kilo variance.

However, in the most common grades sought after by all factories, the difference between top and bottom in R3 steers was 17c/kg, €60 per head and 15c/kg on heifers, and €53 per head on a 350kg carcase.

Sixteen categories

For this exercise, the Irish Farmers Journal has selected four specific grades from steers, heifers, young bulls and cows to provide an overview of what each individual factory is paying over the course of the year. We have chosen the mid-point for U=, R= and O= cattle as well as P+ for plainer cattle as it is the more popular grade, and on fat cover we have chosen 3=.

The factories are ranked highest to lowest based on the prices paid for these grades with last year’s position in the table also included, as is the national average across all factories in bold at the bottom of each table. In addition to listing the position for every individual factory, we have combined the prices paid at ABP, Dawn and Kepak factories to reveal the strongest performers at a group level. Factories that are not part of these groups are combined in the independent’s group.

Prices are included for every factory that reported in the 16 categories we selected, whether they had one animal or 1,000 in a category. Where a factory has killed no cattle in a particular category, they are excluded from that table.

There is a spread of several cents per kilo between the top and bottom in every category of cattle. This reflects the priority for factories in sourcing particular types of cattle for specific contracts.

Within the larger groups, there is an ever increasing tendency to dedicate specific factories to specific types of cattle. This is probably best illustrated in the cow category, where some factories in the groups are towards the top of the league whereas others are towards the bottom.

Another factor that dictates price is the strictness of specification that is demanded. Foyle Donegal, for example, pays a bonus for a narrow weight range and they and some other factories have introduced a bonus for cattle that qualify for China, which demands under 30 months. Therefore, farmers who can meet these targets will get more money and the overall average price paid is increased.

China was supplied by just seven Irish factories for much of 2019 and it had limited impact on price. That will change in the current year as most factories are now approved for that market.

Supermarkets

Factories with supermarket contracts are usually strictest on specifications but are the top-payers.

Another huge category for Irish beef is supplying burger chains, which drives the cow trade.

This is particularly evident with Dawn Meats though cows are a category where the standalone independents also feature prominently, driven by sales of manufacturing beef. Factories selling outside this trade may be paying less money but are often much more flexible in specifications.

A year to forget for cattle prices

2019 was a year to forget for cattle prices across all categories and it was the third year in a row when prices were lower than the year before.

Prices for R3 steers opened at an average of 367c/kg in January, which was 23c/kg below the 389c/kg paid in January 2018.

The highest price paid in 2019 was in May when the R3 steer averaged 382c/kg, 24c/kg below the peak achieved in 2018. By the end of the year, the Irish R3 steer price at 351c/kg compared with 3687c/kg in December 2018.

It was a similar trend for heifers in 2019. The year opened with the average R3 heifer price at 380c/kg, which was 24c/kg below the 404c/kg average paid in January 2018.

The high point for R3 heifers in 2019 came in June at 394c/kg, 26c/kg below the 420c/kg average that was paid in June 2018. Thereafter, prices fell and closed the year at 360c/kg, 19c/kg below the average paid for R3 heifers in December 2018.

Young bulls not wanted

The young bull trade followed the pattern with the average January price for R3s at 353c/kg, which was a massive 32c/kg lower than the previous January 385c/kg when the R3 young bull price was just 4c/kg lower than the R3 steer price.

The high point for R3 young bull prices in 2019 came in June when they reached 369c/kg but, after that, there was a sharp fall to 326c/kg in December and 25c/kg below the R3 steer price. When this is compared with the gap of 4c/kg at the start of 2018, it is clear that 2019 was the year factories decided they didn’t really want young bulls.

Irish cow prices had been the star performer in 2018 when they opened the year at 327/kg for O3 grading cows in January. This was 32c/kg better than the EU average O3 cow price but they plummeted after June 2018 as drought conditions took hold.

By January 2019, Irish O3 cow prices were down to 270c/kg and, at the end of the year, they were at 263c/kg.

The average U=3= steer price in 2019 was 391c/kg with a range between 369c/kg and 405c/kg, while R=3= averaged 377c/kg, reflecting a spread in prices paid between 389c/kg at the top-paying factory and 372c/kg at the lowest. O=3= steers averaged 363c/kg with the range between 378c/kg at the top and 352c/kg at the bottom. P+3= steers averaged 337c/kg and ranged from 356c/kg at the top to 322c/kg at the bottom.

The U=3= heifer category revealed the biggest outlier in this year’s league tables, with the top factory paying 34c/kg more than the next highest at 450c/kg. This reflects the fact that the number of U=3= heifers were tiny and presented on just one week during the year. The overall U=3= average was 407c/kg, with ranges between 450c/kg at the top and 396/kg at the bottom.

There was a much closer spread on R=3= heifers of 15c/kg with a top of 398c/kg and a bottom of 383c/kg and the average was 388c/kg. O=3= heifers ranged between 388c/kg at the top and 359 at the bottom, while P+3= heifers ranged between 372c/kg at the top and 319 at the bottom with the average at 338/kg.

U=3= young bulls have a 38c/kg spread between top and bottom around an average for the grade of 371c/kg, while the spread on R=3= grades is 25c/kg on an average of 357c/kg. The O=3= grade has a spread of 27c/kg with the average 337c/kg and P+3= grades have a range of 50c/kg between top and bottom with the average 323c/kg

U=3= cows are exceptionally rare and therefore have a wide spread in prices paid of 50c/kg, while the spread on R=3= is 25c/kg.

O=3= is an extremely popular grade and has a 17c/kg spread top to bottom with P+3= cows having a 22c/kg spread from top to bottom.

The most striking changes in comparing Irish factory price performance with the EU average is the relative position of Irish O3 cows compared with this time two years ago. Then they were 32c/kg ahead of the EU average before falling to a point in November 2019 when they were 14c/kg below the EU average.

Continental Europe produces very little steer beef, so Irish steer prices are compared against the EU young bull average.

Irish steer prices have usually been above the EU young bull average but the autumn of 2019 showed Irish factory prices on steers drop 23c/kg below the EU average. At this time, the Irish R3 young bull price was a massive 43c/kg below the EU average in the first week of December.

Irish R3 heifer prices rarely drop below the EU average and are often above but they too dropped 20c/kg below the average at one point in late 2019.

Of course, the Irish beef trade was distorted for much of the second half of 2019 by the factory protests, which led to the kill being stopped at several factories for a prolonged period.

This resulted in a backlog of cattle and many went over 30 months before they were got into a factory.

Farmers protested because of poor factory prices, yet it was farmers who paid for the cost of the protest when prices are compared with the EU average in the final quarter of 2019.