Stride on

Every category of animal from newborn calf to finished steer has seen an increase in price for sellers and is a welcome experience after several years of mediocre values. Prices are still considerably adrift of what is available across the Irish Sea, an issue I discuss with Andrew Meredith, editor of the UK’s Farmers Weekly in this issue. Leaving that pricing discrepancy aside – some of which can be attributed to UK domestic consumers preference for locally produced British beef – the higher price thresholds couldn’t have come at a better time for Irish livestock producers. The beef suckler herd has been under pressure for several years as evidenced by year-on-year reductions in suckler farmer numbers. Price hasn’t been the only reason for the decline in numbers, but higher prices, provided they solidify over an extended period, will certainly deliver more confidence into the sector. Livestock production costs generally have risen in recent years and margins have been increasingly tight, so the higher prices we are experiencing have provided a welcome respite.
Right now, there is a global beef deficit, with droughts and other pressures driving breeding numbers down in some major beef-producing regions, none more so than in the US. Even if climatic conditions, conducive to a surge in production, improve in the US, that will take time to feed into the finished beef market. Being realistic, we must take note of the risk of some consumer resistance to higher prices. In a deficit scenario, that should only have a limited impact, at least in the short term, as the ongoing global growth in middle-class consumers and a consequent rise in discretionary spending should offset any reticence to pay more for beef, as a recognised premium meat product.
We should not, however, underestimate the potential for growth in global cattle production over the longer term. The predicted rise in South American beef output, with spectacular growth in cattle numbers expected on Brazilian cattle farms over the coming decade, should also provide a note of caution. On the contrary, Irish beef production is unlikely to increase substantially, if at all, over the coming period. There are too many downside pressures to anticipate any other outcome. Even if Irish suckler cow numbers stabilise – an unlikely outcome – lower carcase weights, driven by younger slaughtering and a greater proportion of lighter-finishing Angus/Hereford cattle coming from the dairy herd, will impact total tonnages produced nationally. That suggests ongoing supply-side pressures on beef processors – a good outcome for producers. However, given that we export 90 per cent of production, prices will still be impacted by global pricing and production volumes.
Mercosur, if ratified, as is increasingly likely, will eventually dampen European and Irish beef pricing, as will any surge in British beef purchases from Australia and New Zealand. Increased UK beef imports arising from the trade agreements now in place between the UK and Australia/New Zealand have not yet materialised, with closer export outlets, especially China, soaking up extra production from Australian cattle farms. China’s efforts to increase domestic supply, allied to heightened geopolitical trade friction, could have negative consequences, sooner or later, on Irish beef prices. Another space we must monitor closely is the demand trend for white meats. Already significantly cheaper than red meat, chicken and pork are the real competitors for global consumer meat preference. The strides made in productivity and technology adoption by the white meat production sectors have not been matched by the land-demanding red meat sectors. Not all the challenges are at the other side of the fence.