Farm Ireland
Independent.ie

Tuesday 6 December 2016

Five-year price low claims 'are inaccurate'

Cormac Healy

Published 16/11/2010 | 05:00

The differential in finished cattle prices between Ireland and Britain is a continuing bone of contention between beef producers and processors
The differential in finished cattle prices between Ireland and Britain is a continuing bone of contention between beef producers and processors

The article headlined "O-grade livestock farms left with €30m black hole" in the Farming Independent on November 2 contains several inaccuracies and presents a misleading and unbalanced view.

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Firstly, the article claims that "the price, for the year to date, for O-grade cattle in Ireland has slumped to a five-year low". This is factually incorrect. Based on official Department of Agriculture/Bord Bia figures, the reported prices for O-grade cattle (steers) in Ireland for the last five years are as follows (see table).

The price of O-grade cattle this year is above prices paid in 2005, 2006 and 2007. The 2008 figure of 322c/kg is particularly high as cattle prices in 2008 were boosted by the EU Commission restrictions on Brazilian beef, which had a particularly strong impact on both the British and Irish prices.

For this year, on a year-to-date basis, the price of O-grade cattle in Ireland is marginally down (less than 1pc) on last year's level. However, the price of O-grade cattle today is 5pc ahead of the price this time last year.

The official Department reported price for the week ended October 31 for O3-grade steers was 281c/kg compared to 268c/kg in the same week last year.

The article goes on to compare Irish and British cattle prices in 2008 and 2010. As pointed out above, 2008 prices were particularly high and, because of the market condition prevailing at that time, the gap between Irish and British prices was at its narrowest for many years. Using 2008 data therefore seeks to put a particular bias on the comparisons.

Fair

As Meat Industry Ireland (MII) has continuously pointed out, any fair comparison of Irish to British prices must take into account both steer and heifer prices, must take various grades and must take into account the different carcass trim in Britain and the extra cost of transport for Irish beef to the marketplace.

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Looking at the EBLEX official reported prices for English cattle (steers and heifers) for week ending October 31, the comparison would show that for steers and heifers combined, the price difference between Irish and English cattle was no more the €28/hd.

This is before additional Irish processing costs are taken into account. The cost of slaughtering and cutting in Ireland remains significantly higher than in Britain, due mainly to the higher labour and energy costs here. These higher costs cannot be ignored when making comparisons with British prices.

Furthermore, looking at official reported prices for English cattle over the last number of weeks, it shows that the price difference in England between a R4L and a U-4L ranges from 6p to 10p/kg. The difference between an R4L and an O+4L is around 9p/kg and between R4L and O-4L is 25p/kg. These are akin to the differentials that currently exist for Irish cattle.

Therefore, the assertions made in the article about O-grade cattle prices are simply incorrect and unhelpful to an informed commentary on beef trade issues.

Irish Independent