Fall in beef supply makes price drop impossible to explain, ICSA
ICSA warns more farmers will walk away from finishing cattle if prices continue to fall.
Despite Ireland experiencing the sharpest drop in beef production in the EU, factory price drops “defies all logic,” said the Irish Cattle and Sheep Association (ICSA).
ICSA beef chair Sean Sherman said: “Factory quotes have fallen by 80c/kg or more since January, and many finishers are now facing significant losses on cattle bought last autumn. What farmers cannot understand is how prices can be falling so sharply when everyone agrees there are fewer cattle available.”
Mr Sherman was reacting to RaboResearch's latest Global Beef Quarterly, which showed that as beef supplies across Europe continue to tighten, Irish beef production recorded the sharpest decline in the EU, down 14% on last year.
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“At a recent Food Vision 2030 review meeting, Teagasc highlighted declining beef production and stressed that profitability will be critical if Ireland is to maintain its suckler herd and future beef output.
"At the same time, Meat Industry Ireland has acknowledged that cattle throughput is down almost 19% this year,” Mr Sherman added.
He questioned how factories could continue to cut prices “week after week”, despite farmers, Teagasc and industry analysts all saying beef numbers are declining.
Mr Sherman said many winter finishers bought store cattle last autumn based on market signals which pointed towards strong demand and continued tight supplies.
“Farmers paid exceptional money for stores because every signal coming from the market suggested supplies would remain tight and prices would remain strong. Those same farmers are now being asked to absorb massive losses despite the fact that cattle numbers have fallen exactly as forecast.”
He said farmers were “entitled to know what has changed so dramatically that cattle worth over €7/kg at the start of the year are now being quoted at little more than €6/kg.”
Mr Sherman warned if prices keep declining despite cattle numbers depleting, more farmers “will simply walk away from finishing cattle”.
“Farmers are not asking for special treatment. They are simply asking for an explanation. Teagasc, market analysts and the processors themselves all agree that cattle supplies are tightening...
"Yet factory prices continue to move in the opposite direction. Processors have had every opportunity to explain that contradiction, but farmers are still waiting for a convincing answer."
