Friday 26 December 2014

Anger building as penalties bite and prices cut by 5c/kg

Darragh McCullough and 
Martin Ryan

Published 27/08/2014 | 02:30

John Joyce has kept a number of beef heifers indoors.
John Joyce has kept a number of beef heifers indoors.

Another 5c/kg slide in factory quotes is piling further pressure on farm leaders grappling with increasing resentment among beef producers about the state of their industry.

Despite heated scenes at an IFA meeting last week, beef processors continue to cut prices by doubling up penalties on non-quality assured (QA) stock and slashing quotes for up to 40pc of the autumn steer kill by imposing deductions of up to 15c/kg on overage animals.

Steers over 30 months are being hit with 10c/kg deductions, while animals over 36 months are being penalised by 15c/kg.

If these same animals are from non-QA herds, they are now being hit with an additional 15c/kg penalty - on top of the automatic 12c/kg deduction for non-QA stock. Bord Bia estimate 
that nine out of 10 cattle being presented for slaughter are now from QA farms.

However, Bord Bia's Joe Burke believes that up to 40pc of the steers being killed during the autumn period are over 30 months. The fodder crisis of spring 2013 is likely to push this figure even higher this year.

"The age issue is a big one out there at the moment," said Mr Burke. But he said that it was not surprising that quotes for out-of-spec steers were falling to levels similar to cull cows.

"The likes of McDonalds and other blue-chip contracts will insist on QA only beef in their burgers so the outlets for these older non QA steers will not be much different from the markets open to cull cows," he said.

The beef specialist added that so-called prime cattle could fall as low as cull cow prices when there was a surplus, as happened 12 months ago when young bulls were making similar prices to cull cows.

The latest fall in factory quotes comes on top of Tesco's outright rejection of a new labelling system designed to allow Southern cattle be killed in Northern Ireland without incurring hefty penalties of up to £150/hd.

Tesco Ireland responded to queries this week looking for clarification on their stance regarding the new label, which was approved by the authorities in the North last week.

They reiterated that they were not planning any changes to the specifications or labelling for their beef from Ireland.

"There have been no changes to Tesco's age restrictions or specifications in relation to bull beef and there are no current plans to make any changes.

"Our beef is labelled in line with EU rules on mandatory country of origin labelling. We speak regularly to our customers on labelling and our policy regarding mixed origin beef is in line with our ongoing work to provide our customers with simpler on pack messaging and simple supply chains," a statement said.

The British Tesco office that is dealing directly with the labelling issue declined to respond to a request for clarification.

In tandem with concerns about labelling and quotes, farmers are worried that the age specifications are set to fall yet again following comments from Dunbia manager, Padraig Browne at the IFA meetin in Navan last week that retailers are already talking about sourcing bulls that are younger than 14 months in the future. In response to the outcry generated by Mr Browne, Meat Industry Ireland (MII) claimed that market specifications had not changed.

"Statements made last week were in the context of a reflection regarding the longer term trend in the marketplace that animals are finished at younger ages. For the foreseeable future there are no changes to specifications," it said in a statement.

MII added that claims that cattle prices were down by 25pc are inaccurate.

"Prices have fallen from the record highs seen in 2013. Steer and young bull prices are down 10-11pc, heifers prices are down 10pc and cow prices down 8pc compared to this time last year.

"Cattle and beef prices are back in the EU, with prices down 8-9pc in France and Britain and 4-5pc in Germany and Spain.

"The reported Irish cattle price remains close to 100pc of the EU average, which remains a strong performance in what is a challenging marketplace at the moment," it said.

Beef consumption in the EU has fallen by over 500,000t over the last four years, while EU beef output has increased this year.

MII claims that while cattle prices increased by up to 40pc over the last four years, retail beef prices have only increased by 7.6pc over the same period.

The next IFA beef meeting will be held in Tully's hotel in Castlerea at 8.30pm on Thursday, September 4.

Indo Farming

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