| 3°C Dublin

Prices up but optimism has cautious tinge

It'll be no surprise to farmers to hear that leading players in the meat industry are downplaying the possibility of €4/kg for beef in 2011. However, they did admit that the situation is one of the most positive they've witnessed in recent times.

"The last time that market returns were this strong was 2008 and if anything they're looking even better for the coming year," said Dawn Meats Group development manager Paul Nolan.

Meat Industry Ireland's director Cormac Healy backs this up, noting that December 2010 prices were up 12pc on the previous year. He also pointed to Ireland's most important beef markets, Britain and Continental Europe. "Beef production in the EU-15 is forecast to be 1.5-2pc lower and 3pc lower in the UK."


Processors also acknowledge the impact of the possible opening up of the Turkish market where beef is reported to be making up to €10/kg.

"If Germany continues its new trade with Turkey, it will create more demand in Germany for Irish beef," said Slaney Foods managing director, Rory Fanning.

MII's Cormac Healy said that he expected only small volumes of Irish beef to go to Turkey because of the onerous criteria that any exports would have to fulfill.

Paul Nolan agreed, saying that processors were more interested in the opportunities arising out of the gaps left in the market by others chasing the Turkish trade. "Our job is to fill the holes left behind because that's where the long-term business lies."

Some potential clouds on the horizon centre on possible increased exports from Brazil and the US. According to MII, the US has been increasing its beef exports to the EU in recent times due to a new 20,000t quota it has brokered. Mr Healy said the level of imports from Brazil would be determined by the strength of its own domestic market and the number of ranches in Brazil that were EU approved. He estimated that Brazil had about 2,300 farms approved by the end of 2010. This is a 40pc increase on the corresponding number in 2009.

Exchange rates and trade deals are other concerns for the sector. "Let's not be lulled in to a fall sense of security by saying that South American beef has improved in price. It has, but Irish fillets, strip-loins and rib eyes are very important cuts whose price will be undermined by any excessive concession by the EU to Mercosur or to GATT," said Mr Fanning.


On exchange rates, Mr Fanning maintained that 84p/€1 was the tipping point. "We need sterling to stay lower than 84p/€1 to keep cattle prices where we want them."

All the processors said that they were keen for winter finishers to have a good year. "We want to make winter finishing a viable proposition for beef farmers in order to keep an even spread of cattle throughout the year for the premium markets that we serve," said Mr Fanning.

"The one factor that could put downward pressure on cattle prices in the second half of next year is a return of seasonality, which could create an oversupply in the autumn.

While grass finishing for the autumn has been the better side of beef finishing in recent years, farmers should be wary of an over-supply tipping the balance at this time of year," he said.

Processors also expressed convern that higher beef prices would hit sales.

"Higher beef prices will bring a challenge for consumption," warned Mr Healy. "Consumption in the EU is forecast to fall by approximately 1pc in 2011. In the UK, a combination of higher prices and austerity measures are expected to lead to a 2pc drop in beef consumption."

Indo Farming