Background Paper
MEAT
Note: The views expressed in this background paper do not purport to reflect the views of the Minister or the Department of Agriculture, Food and the Marine
This paper will cover beef, sheep, pigmeat and poultry.
Beef Analysis 2025
Background
Economic contribution
The Beef Sector, with its almost uniquely widespread geographical coverage, is among the most important Irish indigenous industries. There are over one hundred thousand farms contributing to cattle output in Ireland. The Irish Beef sector is mainly broken into Suckler producers and cattle finishers, with nearly 1.5 million head of cattle sent for slaughter in Irish meat processing plants in 2013 alone. At over €2.1 billion, the production of bovine animals accounted for 30% of the gross output of the agriculture sector in 2013, making it the most important primary agriculture product in Ireland at farm level.
Beef Exports
Ireland exports 90% of the beef produced here. It is the biggest net exporter [by value/volume or both] of beef in the EU and the 5th biggest in the world. Exports in 2013 amounted to 470,000 tonnes worth over €2.1 billion. This represented a 37% increase in the value of exports since 2010. The United Kingdom remains the dominant export market for Irish beef, representing 53% of exports or 250,000 tonnes. Most of the rest of our beef exports (214,000 tonnes or 45%) go to Continental Europe, particularly France, Italy, the Netherlands, and Scandinavia.
Irish beef prices relative to non-EU International Competitors (Brazil and US)
Irish prices increased substantially from 2009 to June 2013, where they hit record highs. Prices have fallen since then as a result of a number of factors, including increased supply and falling consumption. A tightening of supply should lead to some rises towards the end of 2014 and into 2015.
Prices in the USA also have been on an upward trend for a number of years, with weather related supply constraints having a particular impact. The USDA expects prices to continue to rise in the short term as a combination of the drought in 2012 and the dry conditions affecting beef producing states of Texas and Oklahoma continue to have an adverse effect on beef output..
Brazilian beef prices have been rather more variable since 2009 but have been on a steady increase since 2013 as drought has affected their grass based production system. Increased exports to Russia, on foot of the Russian ban on EU imports, is expected to continue to push Brazilian prices up, at least in the short term. Competition for land use from arable crops may limit production increases.
However it is believed that Brazil is now exploring a rapid intensification of its beef output and analysts predict that their output from feedlots could double by 2022. This reflects the belief in Brazil that they are best placed to take advantage of growing demand for beef products in markets such as Russia where EU and Australian beef is currently excluded.
Live animal trade
In addition to beef exports, Ireland also has a strong live export trade to Europe and beyond. In 2013 209,000 head of cattle were exported to our main markets in the UK, particularly Northern Ireland, Spain, Italy and the Netherlands. A large number of young calves are exported to Belgium, Spain and the Netherlands, while the UK and Italian markets are important destination for weanlings, stores and finished cattle. Last year, nearly 20,000 animals were exported outside the EU, with most of these going to the Libyan market.
Current Sectoral Goals
The medium term policy for the sector has been shaped by a combination of the strategic goals laid out in Food Harvest 2020 and, following on from that, the recommendations of Beef Activation Group established to oversee the implementation of FH2020. The Beef Activation Group focused on areas such as breed improvement, technology transfer, animal health concerns, processing efficiencies, and market development.
The Beef Activation Group recommended increasing the headline target contained in FH2020, in the value of beef output from 20% to 40% by 2020. This more ambitious target has already essentially been met, with the value of output having increased by 39% by the end of 2013, however it is noted that the 2013 output levels were buoyed by all-time price highs and the sector continues to face a number of challenges.
Economic Analysis
Price volatility
The marked decline in beef prices in the last 12 months follows a period of unprecedented price increases. Price volatility and fluctuations in returns to producers will continue to be a feature of the marketplace. The graph below demonstrates the evolution of beef prices in Ireland over the last 10 years, relative to GB and the EU15
Farm incomes
There is huge variation in profit levels between farmers in the beef sector. Nonetheless, the average beef farm is a loss making enterprise when income and investment supports are excluded. Direct payments, which incorporate all public farm supports, account for an average of 165% of family farm income on suckler farms and 119% of family farm income where beef finishing is concerned.
Teagasc’s National Farm Survey (NFS) publishes detailed annual data on farm level economics. It is a national survey of over 900 farmers, representing a population of circa 79,000 farms, though it is important to note the NFS only includes farms with a standard output of €8,000 or more (equivalent of 14 suckler cows)
The National Farm Survey in 2013 shows average family farm incomes of €20,019 and €7,988, for full and part-time farmers respectively, in cattle rearing enterprises (suckler farms). The figures are higher for other cattle (fattening) farms with average full-time family farm incomes of €30,999 and part-time family farm incomes of €11,141. This is compared to an average €65,287 family farm income for full-time dairy farmers.
Sectoral heterogeneity
The beef sector is made up of very diverse types of farming enterprises based on the progeny from both dairy and suckler cow herds, with a higher prevalence of suckler cows (50% of beef production) than many other EU member states where about 2/3 of beef production comes from the dairy herd. Suckler production systems vary from production of weanlings to calf-to-beef systems, with avariety of different beef fattening enterprises finishing steers, bulls and heifers at different ages and at different times of the year. These enterprises vary by scale, structure, degree of specialisation, intensity, and whether they are operated with other farm and non-farm economic activities. These alternative production systems result in different production dynamics and associated economic returns.
Graph: Number and category of cattle slaughtered at meat plants
Grass based production
Grass based beef production gives Irish farmers an important competitive cost advantage over international competitors. Teagasc notes that, on average, the cost of producing 1kg of live weight from grass is 80-85% less when compared to an intensive concentrate-based system. When a calf is weaned from the cow in Ireland, there is potential to achieve 80% of its live weight gain from weaning-to-slaughter from grazed grass.
International Trade Agreements
The EU consumes about 7.8 million tonnes of beef each year, with the key high value cuts segment of the market amounting to about 500,000 tonnes. Currently imports into the EU amount to over 300,000 tonnes and the import requirement in the coming years is not predicted to go much beyond 400,000 tonnes.
In addition to ongoing deliberations in the WTO, the EU is currently negotiating bilateral trade agreements (incl. with US, Mercosur and Canada) with which will impact on beef supplies in Ireland’s primary export markets in the EU. This will particularly impact competition in the high value cuts end of the market which, while small in volume terms, accounts for over 25% of returns in terms of value.
Processing sector
The Irish beef processing sector comprises 32 major slaughtering facilities, which are supervised by DAFM and are approved to export from Ireland to local, EU and third country markets. There are 195 low-volume slaughterhouses supervised by the Local Authority Veterinary Service that may export within the EU. In addition, there are a significant number of standalone (i.e. no slaughtering) beef boning and beef added value processing businesses. While annual throughput in 2013 was 1.5 million cattle, implying a weekly average of 28,800, in actual fact however there are seasonality influences in livestock production which means that in reality weekly cattle slaughtering ranges from 24,000 to 33,000 head.
While some of the excess capacity and scale issues in the industry were addressed by the Beef and Sheepmeat Investment fund, slaughtering on 3 or 4 days per week is still the norm in many slaughter facilities.
Social Analysis
Size and Distribution of the National Herd
While the beef sector is ubiquitous in Ireland, with suckler and beef finishing farms spread throughout the country, the size of these farms tends to get larger when moving from west to east. The 2010 Census of agriculture showed that there was an average of 12 cows in the NUTS 3[1] west, border and south western regions compared to regions such as the midlands mid-east and south east which had an average of 19 cows.
The long term tendency of rising sucker cow numbers and declining dairy cow numbers has altered slightly in recent years. The increased interest in dairy production post quotas will result in some farmers shifting from beef to dairy production in the coming years; mainly younger, better educated farmers on larger holdings.
Effects of more beef supply from the dairy herd and possible reduction in suckler numbers
The number of beef animals coming from the dairy herd is expected to increase substantially in the coming years as the sector expands in response to the abolition of dairy quotas in 2015 with Teagasc estimating that a c330k increase in dairy cows numbers will be necessary to achieve the 50% increase in milk production targeted in FH2020. This level of increase will produce an 150k male calves per annum. However an increased use of sexed semen could cause this figure to drop substantially. The use of sexed semen by Irish farmers is still in its infancy and results in 2014 are believed to have been mixed (lower conception rates than some expected.
The additional progeny not used as replacements in the dairy herd will impact on the beef market. The direct implication for suckler cow numbers is difficult to predict and is dependent on a range of internal and external factors. FAPRI-Ireland projections suggest a decline in suckler cow numbers by over 200,000 animals to around 800,000 for the period to 2030. The reduction in suckler numbers is less than the anticipated gains on the dairy side. Overall, this leads to a marginal increase in the volume of beef produced, although the type of animal going to slaughter will change to reflect the greater influence of the dairy herd in supplying the source animals; this has implications for the beef supply chain and market returns.
The above predictions will be obviously be influenced by a number of factors including:
- The absence of any EU bilateral trade deals
- The introduction of a well-funded RDP scheme for the suckler sector which will also impact the evolution of suckler numbers.
- The take-up of sexed semen by Irish farmers.
Market Demands and Pricing
Irish beef is now listed with more than 75 high-end retail chains across EU markets. This wide portfolio of customers has contributed significantly to higher returns for Irish beef in recent years and reflects the success of Bord Bia’s differentiation and premiumisation strategy, which focuses on the key attributes of Irish beef: environmentally sustainable, grass-based production systems, full traceability, quality assurance at all stages and superior eating quality.
The pricing structure for beef animals in Ireland reflects market demands around the fat (1-5) and conformation (EUROP scale) scores of the animals based on a carcase classification grid. The Quality Payments System (QPS) is a payments system agreed between farmers and processors in order to incentivise and reward the production of higher quality animals. In addition, a bonus is paid for animals from quality assured farms that are under 30 months of age and have resided on no more than 4 holdings. Retail preferences for smaller steak cuts also results in reduced price per kilo for animals above defined weight levels.
Technological Analysis
Genomics
Animal genetics is a powerful tool that aids farmers in identifying superior animals as the parents of the next generation. A central focus of improving on-farm profitability is on optimising animal growth and reproductive performance by using high genetic merit animals.Knowledge of the DNA profile of calves at birth, and how the DNA profile affects performance, can facilitate a more accurate prediction of how an animal will perform – known as genomic profiling. Investment in this area canposition Ireland at the cutting edge of genetic selection and herd development.
Increased output and efficiency
There are considerable opportunities to improve the output and efficiency of the National beef herd through a range of new technologies and herd management techniques as outlined below:
●Improving grass management and utilisation
●Reducing the national average calving interval fromits current level of over 400 days
●Increasing the number of calves born per cow per year from current figure of 0.8
●Increasing percentage (currently less than 25%) of cows producing a calf within a 12-month period.
●First-calving at 24 months of age in a higher proportion than the 10% of heifers where this is presently achieved.
●Continuing advancements in well designed herd health programmes
●Collaborating with other farmers to achieve scale or share facilities.
Breed policy
Charolais and Limousin sires accounted for 73% of calves in the beef herd in 2013. 90% of beef calves born in Ireland came from 5 breeds of Dam - Charolais, Limousin, Angus, Hereford and Simmental. 69% of beef sired calves in the dairy herd came from early-maturing Aberdeen Angus and Hereford sires, mostly because of ease of calving and short gestation traits of these animals.
ICBF research shows that selection of animals based on replacement and terminal indices should be the key determinant of animal selection as there is as significant a variation within breed as there is across breed. At the same time, producing the right animals with the appropriate breed and genetic traits for the production systems in place, and with a view to market specifications, is vital for the sustainability of suckler enterprises
Environmental Analysis
Greenhouse Gas Emissions from Beef Farming
In a European context, Irish greenhouse gas emissions from Beef farming is very low compared to many of our fellow member states. Ireland’s emissions per kg of beef are 18.4 kg/kg[2]compared to an EU average of 22.2kg/kg. Our traditional grass fed production system allows animals on the land for longer periods and relies less on intensive feeding months indoors. However, at 32% of national emissions, agriculture is also responsible for a greater share of national emissions in Ireland compared with our EU neighbours. This reflects the considerable importance of agriculture to the Irish economy and the significance of the livestock industry.
Under the 2008 climate and energy package, Ireland is required to deliver a 20% reduction in non-ETS GHG emissions by 2020 (relative to 2005 levels). Agriculture is the largest source of emissions in the non-ETS sector and a high proportion of its emissions come from agricultural livestock where cost effective mitigation is limited. In January 2014, the European Commission brought forward a Communication on proposals for a 2030 policy framework for climate and energy[3]. Under this proposal, emissions from sectors outside the EU ETS would need to be cut emissions by 30% below the 2005 level. This effort would be shared between the Member States although details on how the effort-sharing would take place have not yet been elaborated upon.
Origin green
Origin Green is a national sustainability programme developed in Ireland by Bord Bia – the Irish Food Board. It offers an independently verified structure for Irish farmers and food manufacturers to demonstrate their sustainability performance and develop plans for further improvements. The target for the programme is to have 75% of food and drink exports coming from farms and food manufacturers that are members of Origin Green by the end of 2014.
At manufacturing level, Food companies can become a verified member of the programme by developing a multiannual sustainability plan focussing on sourcing, resource efficiency and social sustainability.
The focus of the programme at farm level is to incorporate issues such as greenhouse gas emissions, water, biodiversity, energy, waste, animal welfare and soil health. . Carbon foot printing has been central to the rollout of a sustainability audits, funded by DAFM, across all 43,000 beef farms that are members of the Beef & Lamb Quality Assurance Scheme (BLQAS)
Regulatory Analysis
Dairy Herd Expansion
The number of beef animals coming from the dairy herd is also expected to increase substantially in the coming years as the sector expands in response to the abolition of dairy quota in 2015. The additional progeny not used as replacement in the dairy herd will impact on the beef market
Labelling
Beef in the EU must satisfy both mandatory and voluntary labelling requirements Mandatory labelling requires that all marketed beef must include inter alia the origin of the beef i.e. the country where it was born, reared and slaughtered. The Voluntary labelling rules will come under general labelling rules from December 2014.
These labelling requirements are particularly important for an export dominated industry, including in markets where there is a clear preference for national products. This also impacts on the market outlets for live exports from Ireland when they are eventually slaughtered.