Farmers should admit that beef prices are quite strong at the moment, given the current situation we find ourselves in as a result of Brexit, according to managing director of Kepak Group John Horgan.
Horgan spoke to AgriLand at an event where Kepak revealed it is now contributing more than €35 million annually to the local economy in Cavan and surrounding counties through its majority-owned pork and bacon business McCarren Meats.
He said: “To be honest, and farmers should admit to this, prices are quite strong relative to the situation which we find ourselves in – where sterling is almost at 90p, when we are slaughtering as many cattle as we are for the last few weeks and will be for the next few weeks.
“It’s a testament to the investment in the beef processing industry, and the lamb processing industry, in Ireland, that we are able to slaughter those volumes and market them without huge hiatus in the marketplace.
In those circumstances, if we wound the clock back six months, we wouldn’t have predicted that things would be as good as they are today.
“Farmers may not be happy with current prices, but in the context of where we have come from, to where we are today, all told, they’re not bad.
“What’s also quite surprising, is the strength of livestock cattle prices in the markets that farmers are buying for feeding over the winter.
“So hopefully we will be able to deliver the best prices we can and that will work for farmers as well,” Horgan said.
‘Already living with the consequences of Brexit’
Horgan outlined that one of the most difficult periods in the Brexit process has already passed; the morning following the referendum when the exchange rate against sterling collapsed.
“That has impacted quite significantly – not just on our business, but on all exporting businesses to the UK. So Brexit for us is almost 18 months old now. The next phase could be two or three years time, who knows?
We’re living with the consequences of Brexit already, we have obviously tried to adjust our pricing in the marketplace.
As Kepak continues to export to many UK retailers – where they already face strong competition, especially from discounters – Horgan explained that it’s now more difficult to convince them to adjust to pricing needs.
“But that’s our job, so we’re getting on with it.”
Mercosur: ‘It’s very bad timing’
The prospect of South American beef arriving into Europe as a result of the Mercosur trade deal is a worrying development, particularly given the timing of the potential deal, Horgan said.
Unfortunately it’s very bad timing to consider doing a deal – especially one that includes beef in such significant volumes that they are talking about.
“We know they have already tabled an offer of 70,000t and the pressure from Mercosur will be to increase that,” he added.
There are fears that this offer might be increased further as a way of pushing other aspects of the Mercosur deal through, Horgan said.
“The impact of such a volume of beef coming into the EU market, particularly when the volume is in one or two or three cuts, represents a multiple in terms of the quantity of cattle slaughtered in Europe.
Given our dependence on exports, especially across the European market, it’s going to impact Ireland most.
“The European Commission has done its own studies on this and have drawn all of these conclusions. Despite that, it is still proceeding with it. It really doesn’t add up, especially when we don’t know what the outcome of Brexit is going to be, that they would seek to put a deal in place.
“Viewed from the political side, it seems what they are trying to do is put a deal in place so that it ties up the trade deal between Europe 27/28 and Mercosur – and doesn’t leave open possibilities for the UK to be doing such deals post-Brexit.
“So there is politics in this and unfortunately the sector that will be most impacted will be the Irish agri-sector,” Horgan concluded.