Beef Market update

So far this year, market conditions across export markets remain fairly stable and the UK continues to be a key destination for Irish trade. Last year, 47 per cent of our beef exports were destined for the UK market. We have a steady trade in the UK, where domestic beef prices are strong and that continues to drive this position. Continental Europe also currently represents 47 per cent of exports, similar to last year. However, relatively speaking, domestic beef prices around the EU are a bit more competitive; there is more resistance on the part of consumers to the higher prices that are prevailing across the beef category. While beef production is considerably tighter around Europe – it has dropped about 3.5 per cent – disappointingly we are not seeing an increase in price as a result. On average, for the week ending April 21, Irish farmers received €5.21c per kilogramme (c/kg) – excluding VAT – for R3 steers. Across the EU,  where the majority of male cattle are produced as young bull beef, R3 males are averaging just €5.04c/kg. By comparison, in the UK, R3 steer prices are equivalent to €5.69c/kg – this shows our strength here and the main basis for our reliance on this market.
Meanwhile, approximately six per cent of Irish beef exports are going outside of Europe and the UK and that reflects the fact that these markets are quite competitive – South American and Australian beef are very dominant among global beef markets. The Chinese market reopened for us, thankfully, last year but volumes remain quite subdued overall because of the price-sensitive nature of the market currently.

Supply

Supply-wise, across the EU we have seen a decline of 3.5 per cent of beef in tonnage last year. This year, across the EU forecasts indicate that we might see a further decrease of between 1 and 1.5 per cent. However, in Ireland, a few factors are having an impact, resulting in slightly higher supplies than we would have been expecting. This is partly weather-related as farmers had little choice but to finish their animals in the shed, rather than put them out to grass, making it

a better business decision to fatten them over the last couple of months. And the number of cull cows has increased slightly, which reflects the pressure on the dairy side – nitrates regulations, stocking rate restrictions, lower prices and high input costs – causing farmers to cull cows that are surplus to their requirements. We still anticipate cattle numbers to tighten over the next few months, partly due to the delay in turn-out. With the weather, the supply of cattle coming ready off grass is likely to be delayed to July, which might leave tighter supplies during May and June, and push some of these animals into the autumn as result of the slow start to the grazing season. 
Another important factor is that we are seeing average carcase weights decline. Last year, grazing conditions were also difficult and that meant animals didn’t perform as well as they should and were slower to put on weight and finish. Also, more of our animals are coming from a dairy background and, on average, they will have lighter carcase weights. This has contributed to a few kilos less per animal slaughtered. 

Consumer trends and perceptions

When it comes to consumer trends, the British market is always a useful indicator and a good source of data to focus on. For the first three months of this year, the volume of beef purchases at supermarket level declined by 1.4 per cent and prices paid per kg increased by 7.1 per cent year-on-year. This shows that beef continues to be a stable protein and something that people are reluctant to cut out of their basket, or substitute too easily. On the other hand, we continue to see some pressure with inflation, in terms of the consumer shopping bill. Outside of food, though, pressure has eased in terms of fuel and energy costs. In the beef category, steak and burgers are performing steadily and holding volume year-on-year. Meanwhile, there is a five per cent decline and a 12 per cent decline, respectively, for roasting joints and stewing beef, which suggested the more convenient formats are coming out on top. While roasting and stewing cuts are still popular, perceptions that they require more effort to cook, and also the fact that more shoppers are buying for one or two servings rather than for large families, is affecting this. Elsewhere around Europe, we are seeing a further decline in terms of engagement in the beef category, and some more substitution of beef with cheaper proteins, especially chicken.

PGI status

Meanwhile, Bord Bia has been busy communicating the recent protected geographical indication (PGI) status of Irish grass-fed beef in the marketplace, as an additional strong endorsement of our product. It adds to our established reputation, and customers readily understand what Irish grass-fed beef means. In some markets, we see a higher level of association and recognition with the status, especially in Italy where over 40 per cent of consumers count themselves as being familiar with PGI and deem it as being worth paying more for. France and Switzerland will also be key markets for PGI and we hope to gain traction in these countries soon. We have activity scheduled with journalists and buyers in these regions to link-in with suppliers and we are targeting additional listings and increased premiumisation. While this status is about reputation, it also offers the potential to grow the value of the product and see that distributed proportionally along the chain.