Farmers are reeling from week-on-week falls in cattle prices, which have fallen week on week since the beginning of May, when they peaked at €5.28/kg (excluding vat) for the R3 grade steer having been stable around this level since the beginning of February.

By the end of June, that price had dropped to €5.05/kg.

While this mirrors the trend for EU R3 young bull prices, which have fallen over the same period from €5.07/kg at the beginning of May to €4.93/kg at the end of June, it has been the opposite direction of price travel in Britain.

In Britain, prices had been on an upward trend since the beginning of the year, when the R3 steer grade was on average the equivalent of €5.14/kg, and they have continued to creep up over recent weeks to the point where they are at the equivalent of €5.68/kg by the middle of June.

That is 40c/kg better than the Irish price!

Irish exports to UK

The volume of Irish beef exports in the first four months of 2022 are down 7,118t (or 4% compared with the same period in 2022), at 153,891 tonnes.

However, sales to Britain have actually increased during this period, being up by 1% to 60,881t with an even higher increase in volumes to the north, up a massive 27% (or 3.073t) to 14,627t.

Indeed, in a period where farm gate cattle prices were close to par, Irish beef exports were competitive in the UK market place.

British beef market

Irish beef is sold across all sectors of the British beef market, including the three largest supermarket groups (Tesco, Asda and Sainsbury’s) and the large burger chains, all of which label their beef offering as British and Irish - and not differentiating on price.

In recent weeks, the UK Government has been applying pressure to the supermarket groups on food price inflation, which was 18.4% in May 2023 (having been as high as 19.2% in March).

This is a dramatic change since the beginning of 2021, when food prices were actually falling.

See Figure 1 below.

Source: UK Office for National Statistics.

Price pressure

In this environment, it is inevitable that supermarkets in particular will squeeze suppliers for price reductions.

Where British and Irish beef is interchangeable, factory suppliers will look to source where they can get the lowest prices - and clearly, over recent weeks, that has been in Ireland, not the UK.

In fact, there is widespread concern at present among British farmers that Irish beef prices will pull theirs down.

For Irish beef exports, there appears no better option at present, as the EU average young bull price has trended downwards in line with Irish price falls. There has also been a disappointing performance in international markets; sales to the US have completely collapsed from an already low base at just 944t in the third week of June (compared with 2,823t during the same period in 2022).

In a period where farm gate cattle prices were close to par, Irish beef exports were competitive in the UK market place

Re-entry to the Chinese market at the start of the year promised much but has so far delivered little, with just 287t of Irish beef imported to the end of May.

It doesn’t help that Irish approval is limited to boneless beef and excludes bone-in cuts and offal, and that prices in China have been relatively weak for boneless beef.

UK consumer demand

The highest UK food price inflation in decades has had an impact on consumer shopping behaviour and this isn’t good news for beef or lamb prices.

Both these products are the most expensive meats, and when consumers are forced to make choices, beef and lamb get left out, as these are what can be described as discretionary purchases.

This is reflected in the latest Kantar data for UK retail sales in the year up to 11 June 2023, where beef volume purchases were down 10.8% and lamb purchases were down 9%, even though consumers spent 9% more on lamb and 11% more on beef due to higher prices.

Pork is a lower-cost meat and while sales volumes for it were down also, it was by less than beef and lamb sales being 3% lower in the year to June 11.

Comment

As recently explained in an Irish Farmers Journal article on the current global beef trade, many of the major beef exporters have increased export volumes of beef in 2023, with the exception of the USA.

With China the main beef importer paying less, values on world markets have fallen though less so in the EU, and not at all in the UK.

With the UK taking almost half of Irish beef exports, we might expect to be somewhat protected, but this has not been the case in recent weeks.

Development of the UK market in coming months should also be of concern, as Australian beef is now on sale there and will be a direct competitor for Irish in wholesale and catering beef markets.