While Irish beef exports outside the EU play a lesser role than in the past, our ability to access international markets remains an important ingredient in maximising the overall market return for Irish beef.
Last year, exports of Irish beef to international markets increased significantly due to a combination of the improved global beef trade, a better dollar exchange rate but also because of weaker demand on the internal European market. Maintaining access to markets such as Russia, Israel and North Africa will be important.
The Turkish market became a major focus for EU beef exports last year. Meeting the certification conditions for exports to this market are onerous. And while small volumes of Irish beef may be exported to Turkey in 2011, the main benefit will be in creating other market opportunities on the Continent to fill gaps created when EU exporters supply Turkey.
Export refunds still play a role in facilitating trade with international markets and in December we came very close to a decision by the European Commission to abolish refunds on beef. This must be guarded against this year.
Imports of beef into the EU did fall last year, due mainly to supply availability. With Argentina more or less off the playing field from an export perspective and Uruguay focusing on other destinations, beef imports from these origins will not increase. Therefore, any change in the volume of beef imports coming onto the EU market is likely to be from Brazil or the US.
With the benefit of a new 20,000t import quota, the US has been increasing its beef exports to the EU in recent times. The level of imports from Brazil will be determined on the one hand by the strength of its own domestic market, which has grown significantly in the past two years, and on the other hand by the number of farms/ranches in Brazil that are EU approved, in line with the 2008 EU legislation.
In this regard, by the end of last year, it was estimated that Brazil had approximately 2,300 farms approved for supplying the EU market compared to around 1,650 at the end of 2009. How these farm approvals evolve throughout this year will determine Brazil's ability to export to the EU market, particularly in the second half of the year.
Again, this year is likely to be an important year in terms of negotiations on an EU-Mercosur trade deal.
Meat Industry Ireland (MII) has repeatedly warned on the negative implications for Irish and EU beef production of further import quota concessions are granted by the EU. MII will continue to fight against any trade deal that endangers domestic beef production.
Higher beef prices will bring a challenge for consumption. Consumption in the EU is forecast to fall by approximately 1pc in 2011.
In Britain, a combination of beef price, supply availability and the impact of the British government's austerity measures on consumer spending power are expected to lead to a 2pc drop in beef consumption. Evolution of consumption levels will be a marketplace factor to consider this year.
While overall price prospects for this year look positive, it is critically important that cattle are marketed in an orderly fashion and sold when fit.
The marketplace does not want under-finished or overfat cattle. Presenting such animals for slaughter is inefficient for the producer and processor. Irrespective of the beef price level, unnecessary inefficiencies should not be tolerated.
Finally, the quality payment system (QPS) is now entering its second year of operation. The QPS has brought much-needed market signalling for producers and a payment regime that rewards quality.
This is a progressive step in the Irish beef sector and it is important for the future of our sector that the QPS remains.