Dempsey at Large: Beef - a different protein

We can get carried away as the price of beef continues to rise towards the €7/kg mark.

Some people see it as a long overdue correction as demand outstrips reduced supply and the markets react accordingly.

But the reality reflects a long term change in consumer eating patterns and the effective movement of beef into a semi-luxury category.

The accepted view until recently was that the price of beef was hugely influenced and ultimately controlled by the price of the competing meat products of pigmeat and poultry.

But this seems to have fractured in recent months, and it masks what has happened to beef as a proportion of consumers’ overall meat consumption which has increased over recent decades.

Beef consumption

At this stage, beef accounts for just 20% of overall meat consumption in Ireland and this is fairly representative of the situation across Europe.

While 20% of total meat consumption is accounted for by beef in Ireland, 45% of total meat consumption is poultry and pigmeat 32%. Sheepmeat occupies just 3% of consumers’ consumption of meat.

We are seeing a fundamental shift towards consumed meat being predominantly cereal-based with grass produced meat being increasingly a niche product.

Both pigmeat and poultry have made substantial gains in conversion efficiency and overall productivity in recent decades and these gains continue.

Prices to the consumer reflect these efficiency gains as well as continuous real decreases in the price of cereals. It is no wonder that consumption of pigmeat and poultry has increased.

The consumer perception of grass-based food is hugely positive as we can see from the premium earned by Kerrygold butter compared with the butter produced from intensive cereal-based dairy enterprises in both the United States and continental Europe.

Consolation should be taken by the beef sector that consumption has stayed up so well in Europe and continues to grow in China and the Far East as consumer wealth has increased.

The key question for Irish beef producers is with the new acceptance in Europe of Irish grass-fed beef as a distinct category, will this be reflected in a permanent price premium for Irish beef based on taste and nutritional characteristics?

Or, when supply and demand come back into balance, will we be unable to distinguish our product from the increased overseas supplies?

This seems inevitable under both the Mercosur trade deal with South America, as well as the impact of the UK free trade deal with Australia displacing UK and Irish beef on the UK market.

These are crucial questions which are not getting attention with the current buoyancy in the sector, but now is the time to plan for the future market challenges, not when they hit us.