Friday 19 January 2018

So why are beef farmers asking us for €100m a year?

WELL-heeled Chinese consumers love their western imports.

Returning from a recent trip there, a colleague told me how upper-class Chinese preferred to buy a Mercedes made in Germany, even though the German car giant has one of its biggest car manufacturing plants located on their doorstep.

The prestige they attach to premium foreign brands is not to be underestimated.

When coupled with the clear message coming from Rabobank's latest report on the sector there, you would be forgiven for thinking that a golden opportunity awaits a beef exporting nation such as Ireland.

It shows that Chinese demand for imported beef is set to rocket.

It's not just that they have more cash to splash on the back of a surging economy.

The increase in wealth is also leading to huge social changes. China's rate of urbanisation is roughly 50pc higher than the rest of the world, and more people are drifting towards western diets, complete with its heavy emphasis on meat.

High-profile food scares in China's pork and chicken sectors over the last year is helping to drive growth in beef consumption from its current low of just 4.27kg per year. This is less than a quarter of what the average Irish person consumes, according to the CSO.

Even though Rabobank forecasts beef consumption to increase by little over a kilogram per head by 2021, the shift would have a massive impact on global beef demand.

It would translate into an extra 1.68 million tons of beef demand annually, or over three times Ireland's total beef export volume in 2012.

It is also highly unlikely that China will be able to meet this increased demand from its own farms.

Poor genetics, competition for limited agricultural and water resources and that appetite for 'superior' western product will continue to drive demand for imported product.

At the moment it is China's key beef trading partners in Australia, Uruguay, New Zealand and Brazil that look set to profit.

Despite being the Northern hemisphere's biggest net exporter of beef, the legacy of BSE continues to hamper Ireland's access to this massive market.

However, Irish beef exporters reported unprecedented interest from Chinese buyers at the Bord Bia stand at the SIAL food and beverage show in Shanghai this year.

INVESTMENT

Even if Irish beef traders don't make huge headway into Chinese markets, the fact that it will hoover up surplus production from the rest of the world's big beef exporters will certainly leave gaps in the other key foreign markets for Irish product.

Both Europe and Britain look set to have cattle deficits for the foreseeable future, and if the low-cost South American exporters are focused on China, the prospects for Irish product have to be good.

So why are Irish beef farmers telling the Minister for Agriculture that they need €100m every year in special support from both Irish and EU coffers to stay in business?

They claim that at current market returns, they are not viable and that the national beef herd will effectively disappear over time without additional subsidies.

British beef farmers are currently being paid €370 per animal more than their Irish counterparts for finished cattle, the IFA claim.

Coincidentally, it is the same Larry Goodman-owned ABP that is the biggest meat processor in Britain.

Why can't ABP, Dawn, Kepak and all the other big Irish meat processors not return a price that ensures the business here remains viable, especially if they are able to pay so much more for the same animals in Britain? It's a question that beef farmers have asked for many years.

But maybe it's one that the Irish taxpayer should start asking too.

Irish Independent

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