Beef sector will bear brunt of Brexit impact
Published 29/06/2016 | 02:30
The UNCERTAINTY over the Brexit move has seen up to 10c/kg wiped off cattle prices at the factories - and over €100/hd ringside - with concerns raised over Ireland's €2bn meat exports to the UK.
Rabobank's analyst Justin Sherrard warned the key risk was the "uncertainty" that will dominate over the months ahead.
"There is so much uncertainty around, and questions around that it might mean the UK looking for alternative supplies of beef," he said.
Some two million tonnes of meat were imported into the UK last year, with over 80pc from the EU including the main suppliers of Netherlands, Ireland, Germany and Denmark.
"I think the priority for the UK will be shoring up what they have at the moment rather than saying that now is the time to explore other supplies," he said. "If sterling settles at a value that is materially lower, it does spell bad news for the Irish beef industry."
Teagasc economist Kevin Hanrahan has warned the Brexit is likely to impact on all produce including cattle, and may also hit sheep exports to France due to increased competition.
Bord Bia described it as a significant challenge for Ireland's valuable agri-food industry, with the beef trade valued at €1.1bn.
Agriculture Minister Michael Creed said it was important to bear in mind that the EU Treaty provides a two year period for negotiation of exit arrangements.
He stressed within that two-year period existing arrangements will continue to apply.
Mr Creed said a dedicated unit had been established with stakeholders to ensure all vital information was exchanged.
In addition to future concerns over potential loss of market share if the UK strikes deals with countries such as Brazil, the processors' body Meat Industry Ireland (MII) warned the key immediate issues of concern are the fall in value of sterling.
It also pinpointed weaker consumer spending in the UK.
"MII has consistently highlighted that the biggest immediate concern is the market uncertainty that a Brexit decision generates," said Mr Healy.
"That uncertainty has already led to a substantial weakening of sterling over recent months," he said, highlighting the further falls in recent days.
"This reduces euro returns and greatly challenges the competitiveness of our exports. The other concerning factor is the impact on consumer spending behaviour in the UK and its implications for meat sales," he said.
"The UK economy looks set for a very rocky period and weaker consumer sentiment will likely negatively impact all grocery sales including meat."
Meanwhile, factory quotes for bulls and cows are down 10c/kg, with steers and heifers down 5c/kg.
While farm leaders and some mart managers claim that numbers of finished cattle are tight, prices at the marts are also down 6-7c/kg, with some categories back by over €100/hd.
Sixmilebridge manager Sean Ryan described the trade last Saturday as "sticky", with forward stores back by up to €100-120/hd.
The week-on-week fall over the last fortnight has slashed €57/hd off bullock prices, and €32/hd off heifer prices.