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Cattle

General Market Situation in 2010

Because Ireland exports some 90% of its net beef output, external market developments inevitably play a crucial role in determining Irish cattle prices. The price of Irish cattle and beef improved marginally in 2010 and this improvement is forecast to persist in 2011. Continued growth in the live export trade seen in 2010 along with a declining EU cattle population and ongoing restrictions on Brazilian beef imports to the EU will underpin this positive price development. Teagasc estimates that Irish cattle prices will be 4% higher in 2011 than in 2010.

The aggregate value of Irish meat and livestock exports in 2010 is estimated at €2.44 billion. This represents a rise of around 9% when compared to 2009 with most of the revenue growth evident in export returns for beef, live animals and pigmeat. Reflecting the fragile nature of the incipient economic recovery, the European beef market stabilised during the course of 2010 following weak retail sales, particularly of high value cuts, throughout much of 2009 and early 2010. Trading conditions improved as a result of tighter cattle supplies, the decline in the value of the euro relative to sterling and stronger demand for European beef in the Russian and Turkish markets.

Output in Ireland

In 2010 the output value of the beef sector increased to approximately €1.5 billion as trade was boosted by increased export volumes and largely stable cattle prices.

Table3.5 

Prices

Irish cattle prices increased in 2010 relative to 2009. The average price for finished cattle (R3 steer) increased by just under 2% to €291/100kg ex VAT ( note the graph below displays prices over the two years inclusive of VAT at 5.2%.) Average prices of weanlings and store bullocks increased by approximately 2% and 3% respectively. Nevertheless, despite an improvement in margins arising from slightly higher output prices and lower input costs, the majority of Irish cattle farms still earned a negative net return from cattle production in 2010.

Figure3.4 

Slaughterings

At just over 2 million head, overall cattle disposals in 2010 were 9% above the levels for 2009 owing to higher export meat plant supplies and greater live export activity. Total cattle throughput at meat export premises in 2010 was up by 8% on 2009 levels to just under 1.64 million head with higher disposals evident across all categories. The main reasons for the increase were a carryover of animals from 2009, the availability of more finished cattle due to lower live exports in 2008 and some earlier marketing by producers reacting to higher feed costs. Average carcase weights are reckoned to be broadly similar to those in 2009.

Figure3.5 

Beef Exports

The United Kingdom and Continental EU markets together comprised 98% of exports in 2010. The value of beef exports is estimated to have risen 8% in 2010 to nearly €1.51 billion with the volume of beef available for export increasing by 8% to almost 0.5 million tonnes (cwe). In tonnage terms, some 40% of such exports went to the higher value standard, premium retail and premium foodservice markets. Ireland sells over half of its beef exports to the United Kingdom. Trade with Britain was helped by higher availability of finished cattle, a recovery in retail sales and the appreciation of sterling against the euro. Overall, exports to the UK rose by 4% to an estimated 254,000 tonnes and were worth €685 million. Shipments of beef to Continental EU markets increased by 11% to 237,000 tonnes in 2010 and were valued at €817 million. Improved demand in key markets along with greater supply availability and increased export flows from competitors to countries outside the EU all contributed to a strong performance in our major markets (France, Italy and the Netherlands).

Non-EU Market Developments

Beef exports to international markets are estimated to have reached 6,000 tonnes in 2010, with Russia emerging as the principal destination as other EU suppliers concentrated on penetrating the Turkish market. Notwithstanding the fact that the vast bulk of our beef exports go to EU countries, our ability to access international markets is important in maximising overall returns for the beef industry. Last year, the Moroccan and Tunisian markets were re-opened to Irish beef. Also, Israel and Russia raised the age of testing to 48 months in line with OIE (World Organisation for Animal Health) requirements.

Live Cattle Exports

A buoyant live export trade continues to be an important outlet for Irish cattle output, providing a floor for prices and an essential element of competition in the beef trade. Following the abolition of Export Refunds on live animals, except for breeding purposes, this trade is now almost exclusively with other EU Member States. Live cattle exports climbed to almost 339,000 head in 2010 – the highest level recorded since 2000 and up 18% on 2009.  Most of the growth was in calf exports which were around a third ahead of 2009 levels. Between them, the main destinations in order of magnitude – Northern Ireland, Italy, Netherlands and Spain – accounted for 85% of the total.

Figure3.6 

Outlook 2011

The immediate outlook for the beef industry is generally positive. Market returns will be driven by a diminution in finished cattle supplies in Ireland and the EU, a strong live export trade and a competitive global market environment characterised by converging cattle prices and burgeoning demand in Asia and the Middle East.

Indigenous EU beef supplies are contracting as a consequence of ongoing reductions in the dairy and beef cow herds but South American imports look set to remain constrained. Over two-thirds of EU beef production is based on the offspring of dairy cows. Low returns from cattle production has led to some reduction in suckler cow numbers in the UK and Ireland and this trend is expected to continue. Supplies of finished cattle at Irish export meat plants are predicted to decrease by around 100,000 head. Meanwhile, some improvement in beef consumption is likely in the short term as the EU slowly recovers from the effects of the recent economic crisis. However, analysis from Teagasc points out that rising input prices will put more pressure on producer margins in 2011.