Dáil Éireann Debate, Thursday - 14 June 2012
146 Deputy Bernard J. Durkan asked the Minister for Agriculture, Food and the Marine the extent to which he is aware of possible inflation in the beef sector; and if he will make a statement on the matter. [28891/12]
Amharc ar fhreagraCattle prices are determined by supply and demand dynamics in the marketplace. The deadweight price for the benchmark (R3) steer category at start of June was €4.01/kg (excl. VAT) compared to €3.52/kg for the same period in 2011. The average steer price so far this year is 18.5% higher than last year. This trend reflects low supply availability as evidenced by reduced cattle throughput at Department-approved meat plants. Although more recent figures on calf registrations in 2011 show a likely reversal in this trend in 2013.
The export dependence of the Irish beef industry means that external market developments largely determine Irish cattle prices. At present, trade for prime beef is being boosted by ongoing tight supplies in both domestic and key export markets. Strong export demand is also generated by favourable exchange rate movement between sterling and the euro which continues to underpin the competitiveness of Irish beef exports. Currency movements have made it more attractive for Irish beef processors to ship product to our main export market.
Beef prices are currently performing strongly in the UK where producers are receiving the equivalent of €4.23/kg (dw excl. VAT), on average, for R3 prime males whereas the average of the EU-15 beef producing countries is €3.80/kg. Tight domestic supplies to date in 2012 (UK cattle throughput is down 8%) and lower availability in Ireland have contributed to a 23% price increase (in euro terms) over the past 12 months.
In its latest short-term outlook for the beef sector published in February 2012, the European Commission is forecasting that overall beef and veal consumption in the EU will fall over the next 2 years owing to supply constraints and high prices. An ongoing decline in the size of the EU beef herd over the past 4 years is expected to persist in the short run. Carcass prices for all categories of cattle and live animals are expected to remain high throughout 2012 as a result of limited supply availability and competition for earlier marketed cattle to offset high feeding costs.
Current price levels in the Irish beef sector must be understood in the context of the economic variables outlined above. High weanling prices over the last 2 years have helped to stabilise the national herd and have encouraged producers to expand their herds. As with any product, however, prices can fluctuate for a range of reasons. The current high prices have injected confidence into the beef sector and allowed farmers to reinvest in the businesses. The prospects for the remainder of the year appear positive to the extent that supply constraints would indicate a relatively stable price outlook but the demand side in the EU remains particularly uncertain given the fragile macroeconomic environment.
