I took some time out, earlier this week, to research factory beef prices.
After a number of calls to various agents and other interested parties, I found the base prices for steers seem to be ranging from €3.90 a kilo to €4 this week, depending on whether you accept a factory at their word, or whether you dig in a bit.
My conversations were punctuated, every now and then, by sentences that could be considered little pearls of wisdom — or, more likely, "here’s the news we want broadcast".
For example, the reason the factories pulled the base price by 30 cents in three weeks — "our beef’s too dear for the supermarkets. The Brits have been looking around to source cheaper quality product, and have now got it," said one factory man.
However, when I looked up Bord Bia’s website, I found the following for the week ending Jul 14, in relation to farm-gate prices.
In cent-per-kilo, R3 steers were making 400.5 in Ireland, 418.5 in Northern Ireland, and 437.59 in the UK.
This means an R3 350kg cold carcase made €1,401.75, €1,463.70, and €1,531.56, respectively, in the three territories. So where were the Brits getting cheaper quality product?
Another agent trotted out an old chestnut: "the beef price has to come back to get the store price back."
This was even stranger, because we both had previously agreed that grain prices were going through the roof, and that concentrate-feed prices would, no doubt, rise in line with commodities — so a strong beef price is imperative for winter finishers.
So I got "we’ve more competition when trying to sell" and "the stores are too dear", but I wondered why the third leg of the stool wasn’t being mentioned — which would be "the euro has got stronger against sterling, and that’s making the market complicated".
The ‘why’ is simple enough: as we all know, the euro is in bother and has fallen back in value from around 85 pence, in late February, to just under 78p sterling earlier this week.
Department of Agriculture factory returns for late February showed the base price for Rs in the Republic at about €4.04 a kilo, pricing our 350kg carcase at €1,414.
If we get €4 a kilo today, that same carcase is worth €1,400 to the Irish farmer. OK, there’s €14 of a difference, but for ease of illustration, let’s say both animals made €1,400.
Now, factor in the difference in the exchange rate, and that €1,400 reduces the price, in real terms, for the British supermarkets from £1,190, in February, to £1,092.
So the trade in Ireland is under-pinned not only by scarcity of supplies, but also by the weakness in the euro against sterling, which is making our product very competitive.
This is a fact conveniently omitted in my discussions with the factory men.
But I do wonder why, following all the hype over the primacy of Irish grass-fed steer beef, there is a farm-gate price difference between here and the UK of €130 euro, allowing that all other costs in getting the product onto the supermarket shelf are similar for both the Irish and UK product, bar the spin on the ferry. Need I say more?
More worrying, though, is the realisation that the strength of the British market, our single biggest customer, has masked the fact that farm-gate prices here are, on average, running at about 6% above the EU average.
This highlights a certain irony in the much-vaunted QPS system, which is supposed to pay a premium for the better conformation, leaner Continental types, while often penalising our more traditional breeds on the basis of conformation or fat score — breeds such as the Hereford or Angus, and, dare I say it, the better conformation Friesian.
Ironic, indeed, that such Irish animals now clearly prop up the price of Continental animals.
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