Why the UK/Irish beef price gap is back at 85c/kg
One of the most talked about drivers of the beef trade in Ireland in recent months has been the impact of the favourable euro/sterling exchange rate, according to the ADHB.
It says the weakening of the euro resulted in a price differential of as much as €1/kg (70p/kg) between Irish and UK prices at the beginning of March.
However, with the pressure on the trade in the UK intensifying throughout the late spring, the ADHB says this narrowed to be below 42c/kg (30p/kg) by early June, the low point of UK farmgate prices this year.
In more recent weeks, however, it notes that the gap has started to grow again and was around 85c/kg (60p/kg) in mid-July.
According to the ADHB this has largely come about by prices strengthening in the UK against a more stable situation in Ireland.
Such developments, it says clearly have an impact on the competitiveness of Irish beef on the UK market.
Given the expectation of an on-going stronger sterling any reduction in Irish exports to the UK could well be moderated, despite lower production, it added.
Reference to the UK Irish beef price gap causes much division in the Irish beef industry. On the one hand meat processors say that the focus on the comparison of the Irish price with that of the R3 steer in GB is over-simplistic, inappropriate and misleading, while the the IFA late last year used the criterion as justification for a two day blockade of meat plants.
Irish beef kill
In the first six months of this year Irish beef production totalled 275,000 tonnes – a fall of almost 5% compared to the same period in 2014, according to the ADHB.
It says despite production in Q1 of this year being similar to that in the same period in 2014, the expected slow-down, as supplies of finished cattle in Ireland tighten, has been clear in more recent months.
In Q1 the number of cattle slaughtered was back just 6,000 head on the year earlier while in the April to June period slaughterings were back 37,100 head.