This is a subscriber-only article
Recent trends in global meat markets suggest a much brighter future for Irish beef farmers. This week, Phelim O’Neill shows how the global price of pork, beef and lamb has jumped in recent months as markets struggle to get to grips with increased demand from China.
While China’s dominance in global meat markets had been growing over the past decade, the impact of African swine fever (ASF) on its national pig herd has seen imports surge. Analysts report that since the disease was detected 15 months ago, the pig herd in China has plummeted from over 430m pigs to under 200m.
The increased competition has seen beef, lamb and pigmeat prices in the world’s major exporting countries approach record levels. As Darren Carty reports, a favourable trading regime with China has seen lamb prices in Australia and New Zealand surpass the Irish market, at the equivalent of €4.50/kg to €5/kg. Beef prices have also increased to a level that is now in line with Irish prices. Traditionally, Irish and EU beef prices trade at a 30-40% premium over both markets.
Processors are running out of excuses for penalising young bulls and also for holding the base price at current low levels
The knock-on effect from China means that the US, previously the main global importer of manufacturing meat, has a huge competitor. Of the big suppliers to the US, only New Zealand has switched large volumes to China. However, the realisation as to the scale of the competition has seen the price of manufacturing beef within the US jump. High-grade manufacturing beef is running 52% or the equivalent of €2/kg ahead of the last year. Meanwhile at the equivalent of €4/kg, the farmgate price returned to US farmers, who have access to growth hormones, has surpassed the EU price and is well ahead of what Irish farmers are receiving.
News of a surge in global meat markets will give little comfort to farmers in Ireland who are struggling to get cattle killed. But the reality is that this could change quickly if farmers regained confidence when selling. We only have to look to Northern Ireland where even a slight tightening in supplies has seen the beef price jump by 20-25c/kg over the past 10-14 days.
It is more than a coincidence that throughput at Irish factories last week was the highest this year at just under 39,000 head. Farmers will have to work hard if markets are to be turned. Independent processors will respond quickest to the global opportunities. The larger processors of ABP, Dawn and Kepak will have their retail contracts locked down for Christmas with prices agreed as far back as August.
Currently, these retail customers will be operating at a price point well below what is available globally and they will be putting pressure on processors to maintain prices irrespective of the global trading position.
Upward trend
Although there may be some delay before the full extent of the surge in global meat prices is reflected here, the upward trend will continue.
Rabobank is predicting that it will be at least five years before the Chinese market gets to grips with the impact of ASF. Even when this does happen, it is likely that the market will have been significantly reshaped with beef and lamb having gained increased market share.
After sustained negativity, a brighter horizon is presenting itself for our beef and lamb sectors, albeit one that is being fuelled by demand from the commodity manufacturing market. It is a trend that once again questions the logic of Irish farmers being forced by processors to turn their back on more efficient bull beef systems in favour of steer beef.
No more excuses
As markets develop, processors are running out of excuses for penalising young bulls and also for holding the base price at current low levels. Irish processors are in the enviable position where they not only have access to the best premium markets within the EU, but also have the scope to develop new opportunities in what are two of the most rapidly changing meat markets in the world: China and the US.
Against this backdrop, it is not tenable that as one of the six largest beef exporters in the world, Ireland would continue to have the third lowest beef price, with only Argentina and Brazil returning lower prices back to farmers.
The Irish dairy sector is an industry that is the envy of the world, with:
A climate that allows farmers to achieve some of the highest grass yields while protecting the environmental landscape.
A research and advisory model that has developed a highly skilled group of farmers and provided them with the tools necessary to exploit the potential of the grass-based system – from management to genetics.
A co-op structure that has developed a processing model and viable market outlets that are aligned to maximising profitability on family farms with ownership retained by farmers.
With the noise created by general media releases and those with vested interests, it is easy to overlook the fact that Irish farmers have developed a world-class dairy industry that is both economically and environmentally sustainable.
New challenges will always arise and difficult periods will be encountered, but the sector has proved its resilience even in the most difficult periods and throughout an exceptional growth phase.
This resilience is underpinned by a constant appetite for further improvement, a demand for excellence at all levels (from research through to processing) and a solid understanding of market forces and customer requirements.
The focus of our Dairy Day event next Tuesday 19 November, supported by Bord Bia, will be to build on all three pillars. With over 40 speakers and a wide range of technical hubs, the event will give those attending an excellent insight into how developments in global dairy markets will affect Ireland and what lessons can be learned from dairy expansion across the world.
Meanwhile, the range of technical hubs will provide practical advice on how farmers can drive farm profit inside the farm gate. Talks range from trends in consumption patterns, managing the environment, growing more grass and improving animal health.
Our specialist team will be on hand throughout the day and we always welcome feedback on how we can continue to develop our content to meet the needs of our readers.
Doors at the Punchestown event centre outside Naas in Co Kildare open at 9am and further details are available in our special supplement or on www.dairyday.ie.
Early results coming from trial work being undertaken by Teagasc and ICBF indicate major potential to reduce methane production from livestock through better breeding.
The trial work shows animals with superior genetics to be producing up to 20% less methane when compared to those of lower genetic merit.
It is unfortunate that once again this week we saw our national broadcaster, when looking at climate change, simply latch on to the popular solution of reducing livestock numbers rather than taking the time to explore the potential of science.
As we report this week, the rise in fertiliser usage between 2016 and 2018 was identified as one of the drivers of a fall in water quality during the same period.
It was of course a period during which there were several major weather events that disrupted normal fertiliser use on farms.
As Eoin Lowry reports, fertiliser sales this year have actually fallen by 10% with CAN down 13% compared to the year previous. Over the last 20 years, fertiliser use has fallen 25% or 0.5m tonnes.
Meanwhile, in our special Dairy Day supplement, we see data from the European Commission showing Ireland to have some of the best quality waters in Europe.
SHARING OPTIONS: