After several years of weak beef prices, Irish factory prices started to recover this time last year and have continued the upward trend since. While much stronger than a year ago, there is nothing exceptional about Irish prices when compared with elsewhere.

Based on reported prices, Irish R3 steer prices of €4.73/kg were well below the EU average of €5.12/kg paid for R3 young bulls. What’s more, Irish prices have fallen well behind countries that we are traditionally well ahead of such as the Netherlands which is on €5.12/kg for R3 young bulls and even Poland where the price is €4.85/kg. Germany is at a completely different level on €5.99/kg for R3 young bulls while the gap with Britain, the only comparable R3 steer price is 45c/kg. All prices exclude VAT.

Prices are at historical highs in the top three major beef exporting countries of the world. Farmers in Brazil who account for 20% of global beef exports are getting the equivalent of 4.10/kg, while the US price when adjusted to reflect the EU carcase dressing standard is €4.60/kg.

Route to market

The arrival of COVID-19 and widespread lockdown that began in March 2020 caused a shutdown in the food service and hospitality route to market and a big expansion of the retail route. Despite initial concerns, there was minimal market disruption for farmers. As reopening progressed over the past year, supermarket sales of beef have returned to 2019 levels and out of home consumption has recovered.

Fast food outlets were among the first to reopen and traded well in the absence of options for out-of-home food purchases. Meat traders report exceptional and sustained demand from burger chains, with prices paid from outlets in Europe ahead of the UK for the first time ever.

What farmers get paid for cattle is ultimately driven by supply of cattle and demand for beef. While the Irish kill is running ahead of this time last year, it isn’t the case in the UK where the cattle kill for the first 12 weeks of 2022 is 518,331 head, 34,541 or 7.6% down on the same period in 2021 (source AHDB). Being an importer of 20% of beef consumed, any tightening of supply in Britain creates a positive demand for Irish beef, even if the price is much lower.

There has also been a major reduction in German cattle supply. The most recent Eurostat data is for January 2021 and it shows a 17,000 drop in the German cattle kill to 234,000 head, a 7.3% decline compared with January 2021.

Only France has a greater cattle kill in Europe than Germany and Britain so any tightening of supply in either country drives cattle price up and demand from neighbouring countries as well. German demand is what is behind the unprecedented price surge in Dutch and Polish cattle prices.

Ireland is a supplier of high-quality steak meat to Germany but it is demand for forequarter beef used in mince and burgers that is really driving demand.

Historically when EU demand for beef exceeded supply, South American imports filled the deficit. However, with the massive expansion in Chinese demand over recent years, that is now the priority market for their large volume exports with just high value steak meat sent to Europe.

With inflation rampant, particularly for food and energy, there has to be a concern about the impact on consumer demand.

Pig and poultry meat are much cheaper and that is why they are attractive at all times. Yet with animal feed costs and energy, two key components of pig and poultry production increasing, prices for these proteins will also have to increase.

Additionally, the most recent EU meat outlook forecasts that EU pigmeat production will be down 3% this year as farmers reduced production following the price collapse in 2021 and despite a 32% price bounce during March. It also highlighted that poultry production fell 2.7% in 2021 and is forecast to increase by only 0.5% this year while prices in the first quarter of 2022 are 30% higher than the five-year average.

Global beef supply seems in balance with demand for the rest of this year. It will be late 2022 before Australian exports recover to pre-drought levels and US beef futures remain ahead of current prices into next year. Brazil will increase production but China and increasingly the US seems capable of absorbing Brazil’s exports.

Retaining consumer demand in retail and out of home eating will be key in sustaining prices as there is no imminent oversupply of beef.