27 Oct 2016
ANGER OVER BEEF PRICE CUTS AS IFA DEMANDS BRITISH RETAIL PRICE INCREASESCattle
IFA President Joe Healy said severe cuts in beef prices are imposing serious losses on cattle farmers and inflicting grave damage on the €2.5bn livestock sector. He warned that farmers cannot continue to produce beef at a loss.
Joe Healy said the beef market and price chain is dysfunctional and the power of the retailers, with the collaboration of the factories, is forcing Irish beef prices into unsustainable loss levels. “The British retail price of beef has fallen from £7.05/kg in July 2015 to £6.85/kg in September 2016. If the market was working properly and the 14% devaluation applied, the average retail price would be about £7.80/kg.”
He pointed out that British cattle prices have risen by 41p/kg or 13% since May, while Irish cattle prices have fallen from a base of €4.10/kg in June (pre-Brexit) to €3.65/kg – a reduction of 11%. Joe Healy said it is clear that powerful retailers and weak selling by the Irish factories are forcing Irish beef farmers to take the pain of Brexit, when the British retail price should be rising.
The IFA President said the Irish beef sector, including factories, Minister Creed and Bord Bia, must demand real price increases from British retailers to reflect the devaluation of sterling following the Brexit vote. He said a retail price increase, passed back down the chain to primary producers, would be the normal economic response from a properly functioning market. He pointed out that UK retailers were already having to increase prices in response to demands by suppliers including Unilever and Nestle.
Joe Healy said that, with Brexit, it was never more important for our Government and the EU Commission to tackle the excessive power of the retailers. He said politicians talk and promise a lot on retail regulation but have delivered nothing to curb abuses by retailers.
Joe Healy said there is growing frustration and anger among farmers on beef prices and he warned the factories that the price cuts must stop. He said the severe cuts in beef prices have damaged store and weanling prices and seriously undermined confidence in the sector.
Joe Healy again called on Minister Creed to convene an immediate meeting of the Beef Forum to address the income crisis in the beef sector from the fall in cattle prices and make it clear to both the factories and retailers that beef farmers cannot carry the can for Brexit and the sterling devaluation.
IFA National Livestock Chairman Angus Woods said the R3 steer price in Britain for week ended October 15th was £3.61/kg. At an exchange rate of 89.5p/€, this price is equivalent to €4.24/kg including VAT. Compared to the official R3 reported Irish price of €3.79/kg for Oct 16th, the British price is 45c/kg above Irish cattle prices or about €160 per head higher.
Angus Woods said IFA representatives are meeting with factories at local level across the country this week to highlight the rising anger and concern for the future among farmers over loss-making cattle prices.
The IFA Livestock Chairman said another shipment of live cattle sailed to Turkey last week. He said this shipment involved 3,000 head of younger weanling stock, ranging in weight from 250 to 350kgs. A further shipment is planned for later this week, with the ship already in port.