Now farmers face price hit from Chinese beef glut

Old pals Brendan Tully and Paddy Curran discuss the art of selling at Ballyjamesduff Mart, Cavan on Tuesday afternoon. Photo: Lorraine Teevan
Old pals Brendan Tully and Paddy Curran discuss the art of selling at Ballyjamesduff Mart, Cavan on Tuesday afternoon. Photo: Lorraine Teevan
Padraig Brennan, Director of Markets, Bord Bia.
Margaret Donnelly

Margaret Donnelly

Concerns over the Chinese beef market are emerging as a glut of forward-bought beef looks set to curb prices for the first few months of the year.

It's understood that Irish and international exporters have had to drop their prices for the first quarter of 2020 by as much as 30pc amid fears that orders of commodity cuts, which were sought in the last quarter of 2019, could be cancelled.

Padraig Brennan of Bord Bia said there is still strong growth in the Chinese market, where imports are up 40-50pc depending on the meat, and that 2020 will see further growth.

However, he said extra stock in the market at the back end of 2019 may lead to a 'correction' in the market.

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"This has seen prices correct themselves," he said, and it may take a couple of months to clear. However, he said the increase in import demand should continue.

Mark Goodman, Managing Director, ABP International, said at a macro level, demand for beef in China is up 50pc year on year, which is positive, but the value of same has come back by around 25pc since Quarter Four of 2019.

"Value added foodservice/retail clients are a better option for Ireland as opposed to commodity trading like the South Americans if we want long-term value. The plan for Ireland should be to 'proceed with caution'," he said.

Hong Kong, which saw the value of exports of Irish beef fall by 17pc to €70m, is described as a "disaster" as political unrest continues in the city.

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Meanwhile, it is understood that talk of a downturn in the Chinese market prompted a very defensive response from meat industry representatives at last week's Beef Taskforce meeting.

It was pointed out to the farm organisations that China was still a "developing market" and would take time to bed down.

However, concerns have been expressed by farmer representatives regarding the long-term benefits of the Chinese market.

"If China isn't returning a decent price now when it's at its lowest in terms of domestic protein production, then what is the likelihood of it paying strong beef prices in the future?" one farm leader said to the Farming Independent.

Pork output

The loss of around half of China's sow herd to African Swine Flu and the consequent reduction in domestic pork output means the country will have to import close to 18m tonnes of protein this year.

China's 'backyard' producers, who account for 73pc of total Chinese pigmeat production, according to Rabobank, are set to be effectively wiped out in the restructuring of pigmeat production that will take place.

Predictions are that African Swine Fever will overwhelm the outlook for 2020, with growth expected to continue.

According to Bord Bia there is an opportunity for other meats as some consumption change will be permanent as habits form.

But it warned that short-term volatility in China is a reality. The emphasis for Irish beef, it says, will be to grow a preference for Irish grass-fed beef with trade and consumers.

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