First glimmer of light on what processors get paid for beef

The Agri-Food Regulator this week published its first findings on the price they secured for beef sales.

It isn’t the prices that shoppers will relate to as it bears no resemblance to the cuts of beef presented in a supermarket or butcher’s counter nor on a restaurant menu.

Rather it is a composite value calculated to represent the combined value of all hindquarter and forequarter beef cuts and a value for a 500 gramme 5% mince pack is included as well.

The formula for creating this value was agreed by DAFM and ABP, Dawn, Kepak and Liffey Meats, who between them represent over 80% of the total Irish cattle kill. Its original purpose was to comply with EU (Market Transparency) Regulations in 2021 and the companies involved provide these to DAFM to comply with the market transparency regulations.

It has now been agreed that the Agri-Food Regulator will also have access to these composite prices for beef forequarter, beef hindquarter and 500g pack of 5% mince.

These will be aggregated into a single price for each of the products by the regulator from the individual company data supplied by the processors.

This will then be published on a weekly basis by the Agri-Food Regulator and the process began this week with the release of the figures for the last three weeks of November.

For the week ending 25 November, the beef forequarter price was €4.89/kg, the beef hindquarter price was €7.13/kg and the 5% mince price was €8.67/kg.

Complex formula

The fact that the mince price is the highest of the three reflects the fact that the forequarter and hindquarter are an aggregate price that includes the value of all the cuts that make up the forequarter and hindquarter of the animal.

This means that for the hindquarter, the highest-valued steak cuts are blended with the roasts and low-value flank and trims to create an average value and while this is much higher than the average forequarter value, it still isn’t as high as the premium mince.

The positive part of these figures is that for the first time, an indication will be published on a weekly basis of what factories that represent over 80% of the Irish cattle kill are getting for the beef that they sell.

Over time farmers will be able to see market trends for these three categories and it will be possible to relate these to what factories are paying for cattle, notwithstanding the fact that there will be a short time lag between factories buying cattle and selling beef cuts.

Downside

The downside is that these composite forequarter and hindquarter values don’t relate to any cuts of beef that are familiar to either consumers or even the wholesale trade. Some time ago the Irish Farmers Journal along with Bord Bia deboned a U-3+ beef heifer.

The weight and yield of individual cuts are listed in Figure 1 and these are what are generally traded in wholesale beef markets though there may be some variation in trim for specific customers. Some, though not all names, will also be familiar to consumers.

Figure 2 gives a general breakdown of how these cuts are most likely to be used with roasts, steaks and mince (including burgers) familiar to all beef consumers while manufacturing refers to beef that is used as an ingredient in the manufacture of pies or ready meals.

It would be better if the Agri-Food Regulator could publish factory sales price information on beef cuts that are identifiable to farmers and indeed consumers.

It would be easy to dismiss the information on prices secured by factories as inadequate and bearing no relation to the cuts of beef that are widely traded.

However, it would be better to treat this as an important first step on a journey to transparency in the processing part of the beef supply chain.

Niamh Lenehan, the Agri-Food Regulator CEO also said that they would want to get to have “a list of products that would be indicative along the supply chain” and this would include retailers as well as processors.

If we can get to a point where that is achieved then a much clearer picture will emerge. It will take effort to get standard specifications agreed on a basket of identifiable cuts but there is a long tradition in the beef industry of using coefficients to adjust for different trimming specifications.

First step

In many ways, the first step is the most difficult one, but with processor goodwill this process can be successfully developed into providing further meaningful information.

The gold standard remains the USDA model where stocks and prices are updated twice daily but even if we don’t get that far, it was reassuring to hear Lenehan speaking about the ambition to progress this further.

In the meantime, the flow of information that is underway will enable a benchmark to be built for forequarter and hindquarter values.

A final point is that the Agri-Food Regulator has provided an initial report on beef that not only creates an appetite for further information on beef but also for information on other sectors as well.

Niamh Lenehan told the Irish Farmers Journal that work on horticulture is underway and the dairy sector was on the radar. When asked about sheep, she said that “IFA have been vocal in saying that they want more details on price reporting and we are going to look at that.”

The bottom line is that where there was nothing there is now something, and even if much remains to be done, Irish farmers will wish the office of the Agri-Food Regulator well in their endeavours and ultimately they will be judged on results.