Presentations to the agriculture committee of the European Parliament in Brussels this week crystallise the problems facing the red meat sector.

Beef is particularly affected, though sheepmeat is also a concern. Brussels remains in transition as, while the Parliament and committees are up and running, the new Commission due to take office on 1 November has been delayed for at least a month.

So when the parliament agriculture committee called a debate on the future of beef, it was senior officials from the DGs of agriculture, competition and trade who shared their assessment with committee members.

While sheepmeat performance was a cause for concern, it is the market failure in the beef sector that was the focus of debate

In an overall assessment of trade in agricultural products, DG Agriculture deputy director Mike Scannell was particularly positive about pigmeat and poultry meat and, while dairy wasn’t as high as it has been recently, it was considered to be delivering a satisfactory performance.

While sheepmeat performance was a cause for concern, it is the market failure in the beef sector that was the focus of debate.

The Turkish trade for live exports had been disrupted before recent political issues, and may be further affected

Irish prices have been poor for several months but prices have been worse in other parts of the EU. Scannell said R3 prices have fallen by 4% over the past year but this average hides a variance across member states. Poland has the biggest fall, back by 9%, followed by Sweden back 7% though from a much higher base and Germany back 6.6%.

Ireland and UK are back 5.5% and 6% respectively. What is most worrying for beef farmers is that so many negatives appear to have come together to wreck the beef trade across the EU. The Turkish trade for live exports had been disrupted before recent political issues, and may be further affected.

Alongside fresh meat exports, which are down marginally, overall exports are back 4.7% in 2019.

Imports to the EU, most of which are from South America, are also back 4.8% on 2018 though they are still ahead of 2016 and 2017 levels.

More worrying is the issue of EU beef consumption – back 4.5% over the past decade

In volume terms, it was pointed out that the EU is a small player in global terms, producing and consuming in the order of 8m tonnes annually, of which just over 300,000t are imported. However, what wasn’t highlighted is the fact that it is predominantly high-value steak cuts that are imported by the EU, which is the highest-value steak meat market in the world.

More worrying is the issue of EU beef consumption – back 4.5% over the past decade at a time when poultry meat consumption has increased 22%.

There was a focus on the potential role of producer organisations in addressing farmer concerns about supply chain imbalance.

Commission contributors also gave a robust defence of trade deals and their impact on the EU beef industry. It was pointed out that while Canada has a 45,000t beef quota, it has only used 3% of this as it isn’t commercially viable.

The Commission view is that the volumes will remain similar and it will be just the value to the South American countries

Confidence was expressed that a deal with Mercosur wouldn’t dramatically affect the EU beef market either. Mercosur countries currently supply about 200,000t on an annual basis. Access under the trade deal would be phased in over five years and it was pointed out that 50,000t to 60,000t of this was coming in with full tariff paid.

The Commission view is that the volumes will remain similar and it will be just the value to the South American countries that will increase when the 99,000t TRQ comes into full effect.

Comment

Lack of coupled payment and influx of steak meat compounds problem

It is little consolation to Irish beef farmers that there has been a pan European problem with beef prices over the past year.

The problem is made worse in Ireland with the collapse in young bull price and backlog of cattle waiting to be processed.

However, unlike their counterparts in 23 out of the current 28 EU member states, Irish farmers do not have a coupled support for their beef cattle.

There also appeared to be a lack of insight to the trading performance of individual beef cuts

This voluntary coupled support (VCS) puts 40% of total VCS payment or €1.7bn in the pockets of farmers in the member states in which it is available.

This was worth on average €88 per head, but not in Ireland.

There also appeared to be a lack of insight to the trading performance of individual beef cuts and the impact of global trade on these. International beef traders have told the Irish Farmers Journal that the continental EU trade in steak meat is at its weakest point in a decade.

This is the one part of the carcase that traditionally commanded a premium in the EU. South American countries are ramping up the export of forequarter cuts to China at present and off-loading steak meat in the EU.

Currency

When we consider that the value of the Argentinean peseta (ARS) was at ARS5 to €1 a decade ago and ARS10 to €1 in November 2015 compared with ARS66 to €1 this week, it should be little surprise that they can offload steak meat in the EU with full tariff paid.

The Brazilian real (BRL) is now worth less than half its value against the euro than it was in 2010.

These are tough but legitimate challenges

Irish and EU beef producers have a huge challenge dealing with climate change and a growing preference for white meat as well as non-meat protein alternatives.

These are tough but legitimate challenges but what is unfair is forcing Irish and EU farmers to go head to head in their own market with product that benefits from such a competitive currency advantage that is available to South American exporters.