The last weekly bulletin of 2024 published by the Livestock and Meat Commission (LMC) showed that beef prices in December were at record highs, with the price paid for U3 and R4 grading steers around the 520p/kg mark.

While it is an exceptional trade for cattle, it is still fair to point out that farmers in Britain are receiving significantly more, with average prices paid getting close to 560p/kg.

On a 400kg carcase, it is a price gap of around £160 per head, despite beef from both sides of the Irish Sea generally ending up in the same UK supermarket trade.

The current price gap suggests there is potential in the market for NI processors to pay more for cattle in the early part of 2025.

But it also highlights a wider failure by the local beef industry to address an issue that has been a major source of frustration for farmers over many years.

Back in 2012, that frustration led to the LMC commissioning analysts at Oxford Economics to undertake a major study into the nature and cause of the beef price differential between NI and Britain.

Following extensive consultation with industry and a detailed analysis of trade data, a 100-page report was published in December 2013.

The analysis looked at beef prices over the three-year period between 2009 and 2012.

On average over that timeframe, R3 steer prices in NI were 14.2p/kg behind that in Britain, although the price differential widened out to 22.9p/kg in the autumn and was narrowest in the spring months, at an average of 9p/kg.

A greater differential existed for R4 grades, with steers in Britain averaging 21.3p/kg more than in NI over the three-year period.

Similar

While those price gaps are significantly less than what we have seen in December 2024, it is important to note that beef prices back then were around the 300p/kg mark, so the percentage differences are actually quite similar.

However, one area where NI beef processors have fallen significantly behind is on cows. When the Oxford Economics report was published in 2013, NI beef processor representatives pointed out that while they might pay less for prime cattle, they did pay more for cull cows.

Over the three years from 2009 to 2012, the average price paid for P2 grading cows in NI was 9.2p/kg ahead of counterparts in Britain.

That price gap is now in favour of processors in Britain, with price reports in December 2024 showing that P2 cows were 12p/kg ahead of NI, widening out to around 20p/kg for O grades.

The report produced by Oxford Economics in 2013 identified eleven factors which contribute towards the persistent differential in the price paid for prime cattle between NI and Britain.

The eleven factors were grouped together under three main headings – major, medium and minor. In total, three major factors were identified alongside four in each of the other two categories.

Major

The first major factor related to the additional cost incurred when shipping beef from NI across the Irish Sea. At the time, the Oxford economists suggested it cost processors the carcase weight equivalent (CWE) of around 2p/kg to move boneless beef to Britain and 8p/kg to ship beef in retail packs.

The theory of a free market economy would suggest that farmers in NI could achieve higher returns by simply selling their cattle live to processors in Britain – if more farmers did that, it would act to reduce the difference in price.

But there is also the cost to transport live cattle for direct slaughter, which was estimated in the 2013 report at 10 to 12p/kg CWE. In addition, bovine TB was identified as a “significant trade barrier” and given the recent spike in the disease, that barrier to trade is much more significant now.

ROI beef

The second major factor is also still relevant and relates to the availability of a cheaper supply of beef in the Republic of Ireland, which “tends to constrain” NI prices relative to Britain. Between 2009 and 2012, on average, R3 steers in ROI were priced 3.3% lower than in NI.

That gap between NI and ROI tended to widen towards the end of the year, and in December 2012 it was a difference of 23.3p/kg for R3 steers.

However, in December 2024, R3 steers in ROI have been 55p/kg behind those in NI and 92.6p/kg off the equivalent price in Britain – a weaker beef market in ROI is not good for farmers either side of the Irish border.

Seasonal

That leaves the third major factor identified in the 2013 report, which was the more seasonal nature of cattle supply in NI than in Britain.

On average, the Oxford analysis showed that 27.4% of the NI kill was slaughtered in the autumn months, compared to 24.2% in Britain.

Throughout the year, the supply of cattle in Britain tends to be more consistent. An autumn peak in NI supply allows processors to reduce the price paid to secure cattle, noted the Oxford report.

That supply trend is still apparent in NI, especially in 2024, when over 28% of all cattle coming forward were slaughtered in the final quarter of the year.

Medium

Among the medium factors identified in the 2013 report was the lower herd sizes that predominate in NI compared to Britain, which mean farmers here have less bargaining power to negotiate higher prices.

The report also suggested more cattle in Britain meet age, weight and grade specifications than in NI, with data presented from a processor that had factories in NI and England.

At the NI factory, just 28% of the prime kill was ‘in-spec’, compared to 39% and 53% at its two operations in England. “This has an impact on the markets they can service and hence the price paid,” stated the report authors.

They also pointed to higher energy costs faced by NI processors, which were estimated as being the equivalent of 3p to 5p/kg, as well as differences in end markets. While NI factories do supply the major UK retailers, they tend to sell a higher proportion of their beef into lower priced wholesale markets and European outlets than counterparts in Britain.

Minor

That leaves the four minor factors identified by the Oxford economists, which included the movement in the value of sterling against the euro and the potential impact that has on the value of ROI beef when compared to NI.

Four main action areas were included in the Oxford Economics report to address the issues raised.

The recommendations were for a mix of government and industry to take forward. While there were lots of good intentions at the time, little progress has been made in the period since then.

The first key action area was for NI to increase the proportion of cattle meeting retailer specifications for weight, grade and age.

Government and industry were to “encourage and promote adherence to specification”, while also keeping payment systems under review to ensure farmers were incentivised to produce ‘in-spec’ cattle.

To get more cattle into the hands of specialist finishers, smaller scale beef producers were to be encouraged to sell their cattle live as forward stores.

NI brand

The second action area was to differentiate NI beef in the marketplace by exploiting unique selling points such as our traceability system and world-leading feed assurance scheme. A NI brand should be developed.

Action three was to reduce the barriers in moving live cattle from NI to Britain, with a recommendation for government to review regulations around movement of cattle and work with industry to utilise technologies such as genetics to drive down bovine TB.

The final action was for government and industry to continue monitoring beef prices across the various UK regions.