There is a “real imbalance in the carcass” at present in terms of supply and demand of beef in the meat industry, according to Meat Industry Ireland (MII) director Cormac Healy.
Speaking on the Agricultural Science Association’s (ASA’s) webinar on “Agri Supply Chain amidst Covid-19”, about the impacts of Covid-19 and the resulting restrictions on the meat industry, the director highlighted that beef has been the most impacted sector of the meat industry, adding:
“What we’re really struggling on is steaks – and they account for a big part of the overall value of each animal.
We’ve a real imbalance in the carcass at the moment.
Healy said that the high-value steak cuts are not moving and, while the retail sales level has stabilised at a higher level, it is still more concentrated on minced, diced and lower-value product.
“We have to try everything to try and push more steak sales through retail,” the director said, warning that “it’s going to take a number of months yet before you have the food service sector fully operational”.
“I think everybody sees and realises that as restrictions are phased out, the pubs and restaurants are going to be impacted.
We have to work with retailers – not just in Ireland but in the UK and across the continent – to try to get more steaks through there.”
Healy said that more promotion would be needed to encourage the sale of higher-value beef but warned that there is a great deal of uncertainty among consumers at present also, with unemployment levels soaring, so consumer demand may still be an issue.
Covid-19 impact
Commenting on the far-reaching impacts of the coronavirus, the MII director stressed that the effects have been unprecedented both in terms of speed and scale.
He highlighted that the “big issue” is the overnight loss of the food service industry across Ireland, the UK and Europe.
It has particularly impacted on beef for the simple reason that more than 30% of overall beef in Ireland is going that food service route, of total volume; but then, when you look at the type of products that are impacted – the steaks in particular are the ones that would principally be destined for many of the food service channels.
“We estimate that something in the region of 60% of our overall steak exports are going that food service route.
“The other side of the food service market is the fast food level, the burger chains. That has equally been impacted, outlets have closed, and that has impacted on some of the forequarter cuts as well in terms of supply there. It’s been pretty sharp in terms of speed of impact and the scale of it.
“That has result in both price pressure in terms of the finish price that the farmer is getting; and also in terms of throughput.
“We estimate that throughput now, in terms of cattle processed per week, is probably down about 30% from where we were the week before Covid-19 restrictions started to come in,” the director said.
‘Lose a lot of value by freezing’
Commenting on the European Commission’s €80 million aid package, which will focus mainly on Aids to Private Storage (APS), Healy said:
“The kind of support that has come through as of yet falls well short of providing any meaningful support. APS is the mechanism that they have announced. It is not one that has been used for many, many years in the meat sector – in the dairy sector it has been used more.
The challenge for us is that you’re storing and freezing down steak cuts that are going to lose a lot of value by that freezing down [process].
“And the level of aid that they are talking about falls well short of the kind of market impact that has taken place,” the MII director said.