Why live exports and beef industry hit hard by pandemic

Along with the disruption of cattle mart closures, falling demand for livestock for export at the end of March substantially reduced the loads shipped, especially for calves destined for the Netherlands, and there were significant price reductions also.
Why live exports and beef industry hit hard by pandemic

Live exports have been hit hard by the Covid-19 pandemic, according to a comprehensive Bord Bia report published last Monday.

Along with the disruption of cattle mart closures, falling demand for livestock for export at the end of March substantially reduced the loads shipped, especially for calves destined for the Netherlands, and there were significant price reductions also.

The Bord Bia report identified the main problem for beef exporters as carcass demand imbalance, with retail demand mostly for lower value cuts such as mince, diced, or stewing, but low demand for steak. This is exacerbated by availability of low-priced South American steak in Europe, which Bord Bia said is having a big impact on sales of Irish beef in Europe, with prices falling as much as 66% for some cuts and markets.

Logistically, deliveries to both the UK and Continental Europe were proceeding to plan, but the issue of container availability for exports to Asia remained a big concern.

More than two million containers were left idle due to Covid-19 disruption, mostly due to Chinese ports operating at less than 50% capacity in recent months.

The container shortage has also affected Ireland’s dairy exports, with Bord Bia saying, “scarce and expensive equipment” was the main supply chain challenge since the start of the year.

Bord Bia cited reports that over 20% of sailings from China to Rotterdam had been cancelled which, along with container shortages, increased the cost and logistical complexity of exporting to Asia, with freight rates up as much as 200%. The situation was easing with greater availability of refrigerated containers, but increasing compulsory quarantine of ships for up to 14 days will add to constrains on equipment, manpower, and repatriation of vessels and containers back to European ports.

However, despite Covid-19 disruption, Bord Bia said feedback from the dairy ingredients sector was more positive. “The hit to foodservice is counterbalanced by a very significant surge in retail demand. Butter and cheese packers are performing extremely well

and in the shadow of peak production and output. There is significant movement of stocks evident as retailers rally to keep shelves full.”

In contrast, mid-tier consumer dairy companies exposed to foodservice in the UK and Ireland have faced a dramatic drop off in orders, according to the food board.

One example from a soft cheese manufacturer is a drop from 45 tons produced weekly to seven tons in one week.

Producers with multiple markets are trying to keep up with distributor demands from markets with varied results.

Bord Bia said sales of Irish and UK lamb stalled in the last week of March, due to the UK lockdown, and French retailers and foodservice pursuing a policy of sourcing French product, as their market weakened.

“There is concern from industry regarding cash flow and late payments for orders filled earlier in the year,” said Bord Bia sources.

Retail sales of pigmeat remained strong in Ireland, but foodservice sales have almost halted, with secondary processors supplying foodservice starting to lay off staff, and worried about potential bad debts and key customers not reopening.

There is also limited cold storage capacity in the pigmeat industry.

Demand internationally is building, but the lack of shipping containers is hampering ability to fill such orders.

There is strong retail demand for poultry, estimated to be up 30-40%, and expected to be up 20% for the year. But foodservice sales are down 50% and falling further. There are no logistical issues for exporters to the UK, but container availability hampers International exports.

Value-added lines are temporarily suspended across the poultry industry, according to Bord Bia.

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