Beef and lamb among few sectors which can stay positive

THE beef and lamb businesses are among the few sectors which can remain positive about the dangers of a possible global economic upheaval, according to Northern Ireland’s Livestock and Meat Commission (LMC).

“Consumers did not abandon beef altogether during the last recession, and that will not happen this time around either,” say LMC experts.

Demand, particularly for higher end product, may be impacted, but it should be remembered that supply as well as demand determines price. “If we are once again on the verge of a serious recession, it is somewhat fortunate that beef supplies over the coming year are predicted to be tight.”

Forecasts of a 2% decline in beef production across the EU in 2012 provide reassurance. Production right across Britain and Ireland is expected to be lower next year. Even with the prospects of weaker demand, these supply factors could help to underpin prices during recession.

One of the reasons for the strong beef market in the last year has been robust demand from developing economies in Asia, South America, the Middle East, and North Africa.

The US has posted more positive economic growth figures, so even if demand softens in Europe, strong demand conditions elsewhere could keep the beef trade firm. However, this will depend on how trading conditions in the rest of the world develop in 2012, which may in turn depend to a certain extent on how the problems in Europe unfold.

Northern Ireland’s Livestock and Meat Commission also addresses the other big cloud threatening to rain on good times in the Irish beef sector — the ongoing EU negotiations with South American countries on a bi-lateral free trade deal.

The impact of deep recession on policy also should be considered. In mid- 2012, EU and Mercosur (South American) officials are expected to exchange offers in a bi-lateral free trade deal. Exporters of industrial goods from the EU are keen to win access to the lucrative Mercosur market.

The South Americans are obviously very keen to gain more favourable access to the EU agriculture market.

Here, the risks are again seen as very dependent on currency exchange rates.

Pressure on the euro, while the currencies of strong developing economies like Brazil are trending upwards, could leave the threat of lower-priced imported beef offset by exchange rates.