Must avoid peak season stalemate

IT has been another week of difficulties in the beef sector, and of conflict between producers and processors, as the price available for finished animals continued to slide downwards.

There was no slaughtering on Monday, as angry farmers maintained a 24 hour protest at the country’s beef factories. While most of the factories resumed slaughtering on Tuesday, nearly all maintained their silence on quoting for cattle. Meanwhile, their agents were offering producers 1 or 2p per lb less than last week.

There were the first hints of a stand-off developing between producers and processors. Processors were indicating a lack of interest in cattle supplies for the week and some were putting out the word that they were reducing their killing days, while producers said it was not economic to supply cattle at the prices being offered.

Neither side can afford stalemate in the throughput of cattle at the peak of the season, but the differences over pricing have become bitter.

While factory agents offered farmers 252 and back to 241 cents/kg (90p-86p/lb) for R and O grade animals (some offered 3 cents/kg (1p/lb) less for R grade, some were 3 cents/kg (1p/lb) lower for O grade), Meat Industry Ireland, which represents most of the processors, defended the processors’ lower cattle prices.

Cormac Healy of MDI said that difficulties have arisen due to the sharp rise in cattle supplies, coinciding with unexpected poor demand for beef, with more low priced South American beef on both the EU and Russian markets also undermining the price.

The absence of traditional third country market outlets to absorb the extra cattle slaughterings and relieve pressure on the internal EU market was also having a major impact at this time of the year, with Russia the only international market which is open and purchasing beef.

Producers are however pointing out that a significant percentage of beef exports are now going into the UK, where the supermarket prices are strong.

They argue that processors have not provided a satisfactory explanation for the cattle price slump.

Although prices in Britain have also been falling in recent weeks, the price for R3 bullocks in Britain last week was the equivalent of 101.5p/lb, while Irish producers were being paid around 90p/lb, amounting to a difference of e110 per head, on average.

The one steady element in the cattle trade continues to be the demand and prices available for cull cows. They continue to sell for up to 207 cents/kg (74p/lb) at the top of the market, with supplies back around 12% from last year.