Farm Ireland
Independent.ie

Wednesday 21 February 2018

Factories and farmers lock horns on prices as agents' attempt to pull quotes below €4/kg

 

Angus Woods
Claire Mc Cormack

Claire Mc Cormack

The factories and beef finishers were on a collision course this week as processors attempted to pull steer prices below €4/kg.

Factories have dropped quoted prices for steers to €3.95/kg, and heifers to €4.05/kg.

However, strong farmer resistance was forcing agents to pay above these levels to secure stock, with most bullocks being bought at €4/kg, and €4.10/kg available for heifers.

The move is seen as an attempt by the beef processors to cut cattle prices before the autumn flush of cattle comes on stream.

Some industry commentators suggested that factories were aiming to get steers back to €3.80/kg by September.

The farm organisations have reacted angrily to what has been labelled an "aggressive attempt" to drive down prices.

ICSA beef chairman Edmond Phelan urged farmers "to hold the line" above the €4/kg. "Factory stocks are depleted and there is every reason for farmers to take a hard line," Mr Phelan said.

"While there are reports of factories quoting sub €4/kg, the reality is that the demand for beef is still strong, particularly in our most important export market, the UK," he added.

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The IFA's Angus Woods pointed out that the British price stood at €4.48/kg and that international beef markets, as well as demand for offal and hides, remained strong.

He claimed that with low stocks of beef in store, factories were not in a position to force price cuts.

'Bullied'

Mr Woods accused the factories of attempting to "undermine farmer confidence" by destabilising the market and warned that farmers would resist what he described as factory attempts to impose "completely unjustified price cuts".

The IFA representative said farmers would not be "manipulated or bullied" by the meat industry's "self-serving propaganda".

Mr Woods also called on the Minister for Agriculture, Michael Creed, and the Competition Authority to scrutinise the manner in which cattle are bought by the factories.

He accused the factories of using "reverse economics" by employing price cuts to force out numbers, and thereby further depress prices to upset the market and urged the Minister and the Competition Authority to examine this practice.

However, Cormac Healy of Meat Industry Ireland (MII) said the latest price cuts were a response to pressure building in the marketplace.

He pointed out that the euro had strengthened against sterling, with €1 now worth close to 90p. Similarly, the euro had appreciated 11pc against the dollar over the last three months, he said.

While Mr Healy admitted that the trade for manufacturing beef remained strong, he said the steak market had weakened significantly.

“The steak market hasn’t been good, and there is less demand for round cuts. The trade for manufacturing beef has been strong, but this cannot sustain the overall price,” Mr Healy argued.

Cow prices remain attractive despite the price cuts, with €3.40/kg being paid for R grades, €3.20-3.30/kg for O grades, and P grades making €3.05-3.10/kg.

Michael Guinan of ICMSA claimed that factory agents were anxious for cows and that this was indicative of the strength of the manufacturing beef market.

He said processor attempts to cut prices were “opportunistic” and he advised farmers to sell in groups rather than individually.

“Make maximum use of the bargaining power that bigger numbers bring,” Mr Guinan said.


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