Farm Ireland

Monday 19 March 2018

Price gap at 20 year high as UK beef hits €5/kg

Martin Ryan and Declan O'Brien

IRISH beef producers are losing over €5m per week as a €5/kg steer price in Britain pushes the gap between Irish and British beef prices to a 20-year peak.

However, the IFA claimed the factories were struggling to get cattle at base quotes below €4/kg, with farmers using the good weather and the Ploughing Championships as reason enough to hold onto stock.

A difference of over €330 per head for 350kg steers, combined with a €135 gap for heifers, multiplied by their respective weekly kills of 12,500hd and 6,500hd adds up to just over €5m per week.

Difficulties in securing supplies had forced some plants to pay a base of over €4.00/kg for steers and €4.15/kg for heifers and bulls.

The IFA's Henry Burns said the British cattle prices were continuing to rise, increasing by 5c/kg in the last week to the equivalent of €5.02/kg. Northern Irish prices also increased, up 7c/kg to the equivalent of €4.38/kg.

He said sterling moves over the last two weeks had added an additional 12c/kg to the returns from our beef exports to Britain.

The difference in 370kg steer prices being paid to Irish and British producers has ballooned to over €350 per animal and the farm organisations have accused meat factories of profiteering as weekly supplies exceed 30,000 head.

Irish beef prices (VAT exclusive) have been declining steadily since June when the base price for R3 steers hit a peak of €4.50/kg. That figure is down to €3.90/kg this week and heifers are at a base of €4/kg compared to €4.60-€4.65/kg earlier this year.

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Bord Bia figures for the second week of September indicate Irish producers were paid €330/hd less than their British counterparts for R3 steer carcases weighing 350kg.

This year has been the worst in two decades for returns being paid to Irish beef producers compared to their British counterparts. Year-to-date prices show a difference 41c/kg on average between Irish and British prices for R3 steers in 2013. This compares to a 14c/kg difference in 2011 and 10c/kg difference in 2008.

The trend is similar, if less severe for heifer producers. The year-to-date difference between Irish and British prices for R3 heifers is 15c/kg compared to a 2c/kg difference for 2011 and 4c/kg in 2008.

All of the prices quoted are excluding VAT payable to Irish producers at a current rate of 4.8pc to recompense producers for the VAT paid on production inputs.

"Once you go over a weekly kill of 30,000 you are in prime price reduction territory," says Eddie Punch of the Irish Cattle and Sheep Farmers' Association (ICSA).

"There was always an estimate that there would be 150,000hd extra supply this year. In 2012, the supply was well below the long run average and in 2011 and 2012 we exported fewer young cattle. The message out of this is that if we don't have a reasonably robust live export sector the consequences will include lower prices for Irish farmers," said Mr Punch.

Even allowing for the increased supply to the factories, producers are questioning why the price differential with British producers has reached current levels given that 60pc of Irish beef is sold into the British market where the average price R3 steer price has increased to €4.67/kg.

Irish Independent

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