Beef prices lower in new EU states
Following the extension of the EU on May 1, the 10 new countries have added 8.2% to beef production, while consumption has increased by 7.9%.
Because of the greater demand of household spend on food, relative to the EU-15, due to the low level of income, the cost of beef is significant in securing increased sales.
While the household spend on food by the EU-15 is 16%, the range varies from 39% in Lithuania to 22% in Slovenia. While the price gap between the cost of beef in the EU-15 and the new member states has narrowed, a significant price difference remains.
Bord Bia says quality difference may offset the price difference to some extent, this will be more evident in milk and sugar where quota constraints will also apply. There are some limiting factors however, in the pace at which production is expected to increase in the new member states.
The EU Commission estimates the new member states will increase the projected EU levels of production and consumption by 10%.
The building up of the beef herd in the new member states is expected to remain limited as the decoupled nature of direct payments will leave beef production predominantly linked to milk production.
Commission forecasts put total EU-25 beef production at eight million tonnes by 2010. Overall the beef markets are expected to remain relatively stable until 2010.
Production is predicted to remain constant while consumption is expected to decline by half a million tonnes. Irish prime beef prices to producers are 40% higher than the Czech Republic and more than double prices in Poland.
