Analysis presented at last week’s beef forum shows Irish producer prices losing significant ground on producer prices in our main markets over the last six months.

The independent price analysis, presented by Joe Burke, Bord Bia and captured in Figure 1, was a key recommendation of the Dowling Report. While the traditional approach only compares R3 prime male carcase prices, this analysis takes into account the actual prices being paid for each of the different categories of animals and grades.

Understanding the new price comparison

The starting point of the price comparison was to carry out an analysis of the 2013 cattle kill in Irish meat plants, based on the percentage of animals in the different categories (young bulls, steers, heifers and cows) and the main carcase grades. This breakdown is represented in Table 1. Using these values, an Irish “composite cattle price” can be calculated, which equates to the average price per kilo paid for all animals slaughtered in Ireland on a weekly basis.

In order to come up with a realistic “barometer” of our major beef markets, Bord Bia took into account the prices being paid in our main export market for each of the respective carcase categories and grades. These prices are reported weekly by the European Commission.

The carcase prices were accumulated for each of the individual markets, and given a weighting according to its relative importance for Irish exports. For example, UK cattle prices were given a weighting of 53%, reflecting the level of Irish exports there in 2013.

Similarly, % weightings were applied to cattle prices across EU markets including France, Italy, the Netherlands, Germany and Spain, in order to arrive at an ‘Export Benchmark Price’.

The price comparison shown in Figure 1 clearly shows that when cattle supplies were tight in Ireland and across our main export markets in 2013, Irish prices performed strongly, exceeding the benchmark price for a brief period mid-year. Throughout this year, Irish prices lost ground in comparison with our markets. While the prices paid to Irish farmers approached the benchmark price in June, the gap has grown substantially since. What this analysis shows is that if Irish cattle were sold at prices comparable to our main export markets, in general they would achieve a significantly higher price than what is currently being achieved.

Meat industry representatives claim the price comparison has limitations as it does not allow for transport costs and a preference for the domestic offering in certain EU markets. However, the point has to be made that these costs were also present when Irish prices equalled the benchmark price in 2013.

One would also expect that since the profile of Irish beef exports is apparently improving, and premium niches are developing across a number of markets, this should help to compensate for markets where Irish produce is sold at a lower value.