The Irish farm-gate beef price has held around €5/kg or a little better so far in 2024, which is on par with prices paid to farmers in our main export markets. It still remains a long way behind Britain where the same type of cattle are worth close to €300/head on average more, though Irish prices are more than €2/kg or €580/head more than is being paid in Brazil and Australia.

At current prices, on-farm beef production in Ireland isn’t financially viable without support payments and, even with these, farm profit levels are minuscule. The economic sustainability of beef production at farm level has consequences beyond the farm gate as it provides the raw material for the very successful beef processing sector. However, is this business model sustainable in the medium to long term?

The future success of Irish beef will be shaped as much by what happens internationally as what happens in Ireland.

This is primarily because we export 90% of production, with half of that going to the UK and most of the rest going to EU markets. However, the real growth in future demand for beef will come from Asian markets, and these will influence the value of Irish beef both directly and indirectly.

Global consumption

Taking a positive view on demand a decade from now, the Food and Agriculture Organisation (FAO) of the United Nations (UN) forecast that global beef consumption will grow to 77.8m tonnes by 2032 compared with the 71.2m tonnes average between 2020 and 2022.

This extra 6.6m tonnes of extra demand, primarily from Asian markets, means that there will be a strong future market for beef and Ireland is currently approved to export beef to Japan and China, and is in the final stages of securing approval from South Korea.

So far, Irish beef exports to this region are minuscule with strong competition from the US, Australia and the South American beef exporting countries. However, if demand keeps increasing and climate affects supply as is often the case, particularly with Australia, then there is an opportunity for Irish beef sales to increase.

Work has been ongoing over a prolonged period by Bord Bia to place Irish beef as a premium product in export markets. The recent securing of a PGI for Irish grass-fed beef could be the catalyst for adding further value to the product.

In this best case scenario, we would envisage growth in demand from Asian markets outstripping existing providers ability to supply and this would create an additional high value market opportunity for Irish beef.

Downsides

Of course, while this is what Irish farmers would want and perhaps need to happen, there is no guarantee that this extra global demand will translate into a higher relative farm gate price for Irish beef. It is also possible to visualise a much more negative scenario that would decimate an already fragile sector of the Irish agri economy.

The reason Irish beef exports to Asia aren’t viable at present is because they are in competition with supplies from Australia and Brazil, where farm-gate prices are currently over €2/kg below Irish prices. While most major beef exporting countries are close to maximum production capacity, Brazil has considerable scope for expansion.

The extent of this will be shaped by its government policy on the rainforest, and while the present government is committed to protecting the rainforest, its predecessor allowed a massive increase in forest clearance.

In its most recent outlook report, ABIEC, the organisation that represents Brazil’s meat processors and exporters, forecast that cattle slaughter will grow to 47.5m head by 2031, up from 39.1m head in 2021, delivering an extra 3m tonnes of beef.

This projected increase alone is more than four times the total Irish cattle kill through the factories. A significant amount of the increased Brazilian beef tonnage would be exported. This would mean that competition from Brazil in global markets could stifle Irish export ambitions and value.

The likelihood is that we have reached peak output so the question now is can we add further value to Irish beef?

What would be even worse would be the UK agreeing a trade deal with Brazil. Such a deal would mean significant increase in access to that market for Brazilian beef and huge competition for Irish beef in our main export market.

Headwinds are inevitable

Perhaps neither of the most extreme possibilities for Irish beef will come to pass. However, there are headwinds in the decade ahead. Our agricultural emissions levels are legally required to reduce by 25% by 2030, compared to 2018 levels, and there is also the threat to the nitrates derogation. Livestock production will be reduced, the only question is to what extent.

In addition, the focus of the current CAP is environmental protection which has the knock-on effect of further squeezing production.

Convergence has meant that payments have been taken from more intensive highly-stocked farms to more extensive farms with more marginal land. This has reduced production as has the conversion to organic farming by many extensive farmers.

It appears that rather than use the organic payments to sustain a higher cost production, many are choosing to reduce stocking levels to what they can keep on what their organically farmed land can produce.

It appears that reduced supply off-farm over the next decade is inevitable, the only question being the extent of the reduction.

A typical Irish beef processing factory handles around 80,000 head of cattle annually, so logic dictates that if the annual kill drops by 80,000 head then a factory less is required. The likelihood is that we have reached peak output, so the question now is can we add further value to what is left? That will be the key to the future fortunes of the Irish beef industry.