Beef exports fell by 7%, partly due to farmer protests at meat processing plants

Beef exports fell by 7%, partly due to farmer protests at meat processing plants

The resilience and dedication to sustainability and world class quality of Irish food producers was acknowledged last week by Agriculture Minister Michael Creed.

He was greeting the news of a stand-out 2019 performance by the food, drink and horticulture industry, as exports reached €13bn for the first time.

The IFA responded: “Let’s not forget where this export story starts.

“Farmers need to see the benefits of this growth.

“The new 2030 strategy must include targets on farm profitability as well as industry targets.”

It was a reminder to those celebrating the export success that farmers won’t be taken for granted.

As well as supplying the raw material, they had an extra starring role this year.

It was noted in the Export Performance & Prospects Report published by Bord Bia that “frustration among farmers at lower returns was expressed through protests at a number of meat processing plants during August and early September. These effectively closed the country’s beef processing facilities for a number of weeks, impacting on the supply capability of exporters, and resulting in a sharp decline in the value and volume of Irish beef exports”.

The export of beef, including offals, fell 7% in 2019, from €2.4bn to €2.2bn.

With farmer protests heavily curtailing exports of beef and sheepmeat for a number of weeks, and weakening demand in key markets, sheep and sheepmeat exports also fell by 7%, from €315m to €294m. Sustained pressure on prices in Europe due aggressive supply from the UK also hit our sheemeat exports.

The reason for the factory protests by farmers was noted in the Bord Bia report.

“On average, R3 steer prices in Ireland and the UK fell by 7% compared to 2018, while R3 young bulls were 5% lower on average across the EU-15. Depressed pricing impacts directly on farm income”.

Obviously, all is not happy in the Irish beef sector, our largest Irish meat and livestock export category.

The Bord Bia report referred to challenging marketing conditions in 2019 as a result of increasing price competition and sluggish demand in major markets.

There was a 0.9% fall in the volume of beef consumption in the EU, and a further 0.8% decline is expected in 2020.

But this is mirrored in falling supply, with a 0.9% reduction in EU28 beef production in 2019, and a 0.7% decrease expected in 2020.

And the growing opportunity on non-EU markets, Asia in particular, can compensate for weakening EU consumer demand. The EU increased beef exports 8% in 2019, and a further 5% increase is predicted in 2020. Bord Bia also expects opportunity for Ireland’s grass-fed, quality beef in the US. But the Brexit situation remains complex and unknown.

What about the Irish beef farmer situation?

The 2019 statistics indicate marginally increased income, largely the result of lower feed costs, and the exceptional aid provided by the Department of Agriculture (BEEP and BEAM). So, how secure is the beef industry, depending as it does for raw material on farmers who in turn depend on income handouts from the EU and the DAFM?

Are these farmers happy to rely on the promise made by Mr Creed this week of a doubling of the BEEP scheme to €40m in 2020, which could compensate for farming the land at a loss?

Or will the expected slight decline in the cattle supply this year help to lift prices towards farmer profitability?

On the other hand, Brexit difficulties in 2020 could accelerate the 2019 fallback of 15% in the value of Irish beef exports to the UK (down 11% in volume). On such questions depends much of agri-food’s 10% share of Irish exports, 7.7% of employment, 21% of industrial turnover; and 23% of manufacturing industry turnover.

“Bord Bia is resolutely focussed on delivering sustainable growth for Ireland’s largest indigenous industry”, said the food board’s CEO, Tara McCarthy. Sustainability is also Mr Creed’s catchword, but it remains to be seen if his promised extra BEEP funding will keep beef farming sustainable, from the point of view of a sustainable level of profit for farmers.

Food, drink and horticulture exports have grown by 67%, or €5.5bn, since 2010.

But there’s a danger that more beef industry disruption could end the winning streak in 2020.

In 2019, dairy was the exports star, growing more than 11%, despite some key commodity prices weakening.

This took dairy to a 34% share of food and beverage exports, compared to 30% meat and livestock, 18% prepared food, 11% alcohol, 5% seafood, and 2% horticulture.

The introduction of tariffs by the US on EU imports in October disrupted the Irish dairy and alcohol industries, and presents a significant challenge for Ireland’s butter, cheese and cream liqueur producers in particular as they plan for the year ahead.

However, some stocking forward in the US in anticipation of the tariffs, may have helped exporters in 2019, for example in the butter trade, which grew 13%. And overall, it is expected that the positive trend in dairy exports will continue into this year.

If specialised nutritional powders are excluded, Irish dairy exports grew in value by 17.6%, and in volume by 12%.

According to Bord Bia, “Much of the credit for the 2019 performance rests with the industry itself and the central dynamics in the year’s performance may be identified as continued growth in domestic milk production, an intensifying industry focus on development of new markets, and an enhanced portfolio of value added products and customer focused applications.

The export sector of most interest to many farmers is livestock, even if it is worth only 4% of meat and livestock exports. Live cattle exports in 2019 continued the pattern of 2018, a significant increase in numbers, but matched by declining value terms. As a result, the live animals trade fell back 3%, to €167m. It included a strong increase in export of calves, which are of course of lower value than adult animals. In 2019, prices for export calves slumped 13% compared to 2018, while prices fell 9% for weanlings, 8% for stores, and 6% for finished animals.

Bord Bia noted the maximum of 13,200 calves which can be landed per week this spring from Ireland, set by capacity at two lairages in Cherbourg for a total of 4,400 calves at any one time.

Increased demand in 2019 pushed poultry exports up 5%, to €306m.

The UK takes 71% of our poultry exports, so Brexit will be an important factor this year, along with keeping avian influenza at bay.

Irish sheepmeat exporters will expect a return to growth in 2020.

When non-edible items such as live horses, animal foodstuffs, forestry and amenity horticulture, animal hides and skins, are added to edible exports worth €13bn, our total agri-food sector exports are estimated at €14.5bn, going to more than 180 markets worldwide (34% to the UK, 35% to other EU markets, and 31% to non-U markets, after a four-fold increase in the trade to Asia).

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