Irish beef prices have continued to rise over recent weeks, reaching €5.79/kg for the R3 steer grade, up from €5.16/kg in the same week last year.
The trend has been the same in Britain, where prices have been increasing at a similar rate, though the value is now more than a euro per kilo more for the R3 steer at the equivalent of €6.81/kg (source Bord Bia).
What has been encouraging for farmers either side of the Irish Sea is that increasing prices hasn’t had a negative effect on demand, with less cattle available for slaughter in Britain contributing to a scarcity effect.
It is also encouraging that Agriculture and Horticulture Development Board (AHDB) consumer data suggests that over the Christmas period, consumers increased the volumes of beef purchased despite rising prices.
Price increases
However, while retail prices are in most cases higher than they were a year ago, the rate of increase has been relatively low, as shown in Figure 1, and for some cuts has actually fallen.
To pick out a few examples, beef roasting joints are now retailing at £12.38/kg (€14.73) compared with £11.41/kg (€13.58) a year ago, a price increase the equivalent of €1.15/kg.
Sirloin steak - or striploins as they are referred to in Ireland - have increased in value by 53c/kg or just 2.5%, while standard mince has a 9% or 61c/kg increase.
The retail value of rump steak fell by 64c/kg and diced beef value fell by 31c/kg.
There is always a lag period for retail prices of beef to reflect farmgate values and, in extreme cases, they never fully do.
Farmers will be more familiar with periods when farmgate price was very weak not being reflected in lower retail prices, but, at present, retail prices aren’t fully reflecting the farmgate beef price increase in either the UK or Ireland.
Differential
What has been consistent over the second half of 2024 and continuing into this year is the price gap between Irish and UK beef, which continues above €1/kg.
This makes Irish beef particularly attractive to Tesco, Sainsbury’s and Asda - the three largest UK supermarkets which offer both British and Irish beef alongside each other on their shelves.
It also means that the other supermarkets, including discounters Aldi and Lidl which offer exclusively UK beef in their stores in Britain, must feel the price pressure by not having access to an imported equivalent product at a lower price.
It will also be difficult for factories that operate only in Britain supplying beef at present.
On the other hand, the factories that operate in Ireland as well have access to a supply source at €1/kg lower.
Factories in Northern Ireland probably have the best of both worlds, in that they can source cattle at the equivalent of 43c/kg less than the average R3 steer price in Britain, but can still sell it as the same UK beef.
The simple explanation for relatively slow increases in retail prices compared with farmgate prices is that this reflects a time lag, which is usually several months.
What will be interesting to observe is what impact - if any - higher prices have on sourcing policy of UK supermarkets.
There has been a longstanding commitment to buy British, but with Irish one euro per kilo cheaper, there has to be an opportunity for Irish beef to expand its supermarket customer portfolio.
Of course, it isn't just Irish beef import price that is attractive - even cheaper alternatives now exist with Australian and New Zealand beef.
Both these are making inroads in the catering and wholesale beef markets, though they have started from a low base. We can expect their growth to continue in 2025.