Farm Ireland

Sunday 23 October 2016

British beef prices hold firm despite Brexit concerns

Published 05/07/2016 | 02:30

Paul Finnerty CEO of ABP
Paul Finnerty CEO of ABP

The uncertainty over Brexit has sent tremors through the livestock industry here but cattle prices are holding firm in the UK.

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Prices quoted by British beef plants are holding firm at between £3.32/kg and £3.37/kg in England, while 10c/kg was wiped off the price here.

"There has been no decline in British cattle prices since the UK referendum vote, but from an Irish perspective the weakening in the value of sterling will reduce returns for beef exports into our most important market," says Bord Bia's beef expert Joe Burke.

Over recent months, there has been a significant narrowing of the price-gap compared to the past year. The latest recorded prices show the average R3 steer in UK making €4.23/kg, with the equivalent Irish animal at €3.98/kg (excl VAT) - a gap of just 25 cent per kilo.

Mr Burke said that most of the large-scale processors are likely to be hedged against the immediate impact of the currency volatility but will be more exposed to the prevailing exchange rates within four to six weeks.

"Last year 54pc of Ireland's beef exports went into the UK - this year it is slightly lower as the UK has higher volumes of its own beef but we are still likely to see over 50pc of our exports going there," said Mr Burke.

"We've seen an increase in beef exports outside the EU to markets such as Hong Kong, Switzerland and the Philippines. There is optimism that other bigger markets will come on stream for Irish exports to help address the balance as our production increases."

Rory Fanning, managing director of Slaney Meats, says Labour voters in the UK certainly want to be taken care of with a cheap food policy. "The farmer in Britain will come second without any shadow of a doubt," he says. "A lot of work is being done on South American, US or Canadian beef coming in so that they can't pick and choose from the menu such as for steak cuts that are at better prices here," says Mr Fanning.

"We need the good prices for the steak cuts to allow us pay for the kilo of beef - there has been a lot of hard work undertaken to ensure those countries do not have an unfair advantage."

However, the meat industry has been cautioning that a potential UK bilateral deal with countries outside of the EU would cause major difficulties.

Paul Finnerty, chief executive of ABP, which also employs 5,000 people at plants in the UK, cautioned against assuming such trade deals would take many years to arrange.

IFA president Joe Healy stressed market access for Irish beef remained unchanged and the UK market was still dependent on supplies of Irish beef. He said clear direction was needed for beef farmers at the upcoming Beef Forum.

The ICMSA's John Comer said all existing EU trade deals should be reviewed and amended to take account of the UK exit from the EU. He pointed out previous trade deals, such as agreements for New Zealand lamb, had contained significant concessions to take into account their historic trading relationship with the UK.

Mr Fanning says the whole debate centres on what form the UK's relationship with the EU will take and whether there will be tariffs in place. Mr Fanning feels it will impact the revenue for products.

"That is going to intensify the pressure in terms of the average family farm returning a viable income into the future," he says.

Mr Fanning says sterling suffered a devaluation of around 9pc in a week. He said if you count that half of Irish beef is going to the UK it works out at a 20c/kg drop or €70/hd on a bullock.

Mr Finnerty warned a "softening of consumer sentiment" due to instability could also have a knock-on impact.

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