Beef Market Price Index: What does it mean for farmers?

Bord Bia has published its much-anticipated Beef Market Price Index model – one of the key commitments made by the Irish Food Board as part of last September’s Irish Beef Sector Agreement.

The information incorporated in the new indices – which is now available on Bord Bia’s website (see outline below) –  is designed to track market trends with regard to the prices of beef cattle, meat cuts at wholesale and retail level, and the fifth quarter products.

The data will be updated on an ongoing basis.

Image source: Bord Bia

The following is a summary of the main elements involved in the new tool for beef farmers which is aimed at bringing greater transparency and certainty into the struggling sector which experienced significant unrest during the late summer and autumn months after a series of national farmer-led protests in opposition to diminishing farm-gate returns.

The detail outlined here has been provided by Bord Bia.

Irish ‘Composite Price’ vs ‘Export Benchmark Price’

The performance of cattle prices has traditionally been assessed by comparing the Irish R3 steer price at a point in time, with the prevailing prices of R3 prime male cattle (steers / young bulls) across key markets, such as the UK and continental Europe.

However, this price comparison involves a more detailed analysis which takes account of the prices paid for each of the different categories of animals and grades.

The Irish ‘composite cattle price’, as it’s called, equates to the average price per kilo paid for all animals slaughtered in Ireland on a weekly basis – based on the percentage of animals in the different categories annually and the main carcass grades.

The data is published firstly for all animals processed, and then for prime cattle only (steers; heifers; young bulls).

The ‘export benchmark price’ is a market indicator which takes account of the prevailing cattle prices for the different carcass categories and grades, across the main EU markets for Irish beef – including: the UK; France; Italy; Germany; the Netherlands; and Sweden – as reported by the European Commission.

Essentially, this equates to the average price that Irish producers would theoretically receive, if their cattle were priced according to the prevailing carcass prices across the primary export markets.

US ‘By-product Market Indicator’

In relation to the offal and hide coming from an animal, these by-products contribute to the overall value returned from the market, and therefore they influence the demand for finished cattle by beef processors.

While there are no published prices for Irish or EU hides or offal products, there are regular reports available from the United States Department of Agriculture (USDA).

Because these are globally traded commodities, the US data provides a reasonable reflection of market trends.

EU returns tend to be lower, on account of market access and the EU ban on meat and bone meal and blood meal in animal feed.

By-products may be broadly classed into three categories: hide; red offals (tongue, liver, tail, etc.); and white offals (tripes, fats, etc.).

The table and graph provided on the website summarise the latest market trends in the hide and offal markets – on a €/kg of carcass weight basis – as reported by the USDA.

Beef Market Price Index

The Beef Market Price Index is intended to provide an insight into the price performance of prime beef in key markets over time – at the level of the retail or wholesale customer.

The index acts as a monthly indicator of market conditions for Irish beef, relative to the situation prevailing during the initial base period of this study, which was September 2019.

Each month, Bord Bia monitors specific retail and wholesale prices across seven principal markets – Ireland, the UK, France, Italy, the Netherlands, Germany and Sweden – which collectively account for over 90% of Irish beef sales (2018).

Within each market, prices are recorded for steak, round and forequarter beef cuts.

Market prices are weighted according to their relative importance, and collated into a ‘Retail Sub-Index’ and a ‘Wholesale Sub-Index’, whose values are aggregated to form an ‘Overall Beef Market Index’.

The base-line value of the indices is set at 100, according to their respective values during the initial base period (September 2019).

Stay tuned to AgriLand for further information on the introduction of this new index over the coming days.

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