Embargo Monday 12th October 2009 European beef production is set to decline by 500,000 tonnes or 7% over the next five years, according to Bord Bia’s latest assessment of medium term prospects for the beef market. The decline arises from lower output among a number of major producers, including the UK, Germany and to a lesser extent France and Spain. In the meantime, by 2013, Ireland will continue to have in excess of 450,000 tonnes available for export, helping to maintain its position as Europe’s largest net beef exporter.
According to Dan Browne, Chairman of Bord Bia “the prospects for the European beef market remain broadly positive, arising from the anticipated fall off in production levels and likely developments in relation to European beef imports over the medium term. This will in turn create a more positive environment to further consolidate the market position of Irish beef in Europe, which now accounts for virtually all of our exports.”
In addition to tighter European supplies, the volume of EU beef imports is likely to remain more than 15% below 2007 levels. This is due to a combination of a relatively limited number of Brazilian farms being approved to supply the EU market and a drop in output among the leading South American beef producers due to the impact of drought and switching of producers to dairy and cereal production. The combined production of Brazil, Argentina and Uruguay is expected to be 1.1 million tonnes, or 10%, lower by 2012 with a larger fall expected in exports. These suppliers have traditionally represented up to 90% of EU beef imports.
“There has been a considerable slowdown in the value of EU beef sales in 2009 due to a combination of lower volumes, particularly at foodservice level, and a switch to cheaper cuts by consumers and foodservice operators”, according to Aidan Cotter, Chief Executive of Bord Bia. “Demand developments will remain critical to the market environment for Irish beef over the period ahead”, he said. It is anticipated that demand levels will recover gradually in line with the overall economic situation, as economies recover from the current downturn.
The EU market in the interim remains very challenging. In Britain, which accounts for about 54% of our trade this year the sharp depreciation in sterling seems set to maintain downward pressure on market returns. However the market is expected to see its domestic supply of prime cattle fall by as much as 10% over the next 5 years and it will therefore remain our key export outlet. On the continent, tighter supplies among a number of producers will serve to boost import requirements. This is expected to provide further opportunities for Irish beef exports.
Exports to Scandinavia and particularly to Sweden have performed very strongly in recent years, and this is set to continue. However, similar to the UK, currency volatility seems to set to remain an issue over the medium term.
Bord Bia set out a 5 year strategy in 2007 for adding value to beef market returns, - the objective was to grow sales to the higher returning customers by 12% or 60,000 tonnes, at constant output levels, over the period of the strategy. In the first two years of implementation, considerable challenges have been encountered – most notably the economic downturn - resulting in a slowdown in retail beef demand, in the order of 4%, throughout most of our European markets during 2009. The decline at foodservice level has been even greater.
Nevertheless, the Irish beef industry has performed very strongly over the period, with the portfolio of retail customers purchasing Irish beef across Europe growing further from 62 in 2007 to over 70 now. This is, unquestionably, the broadest listing of retail customers held by any country in Europe. Over the period, volumes going into premium outlets, despite an overall fall in export availability of 60,000 tonnes, have grown by 16,200 tonnes. Taking into account lower availability, this represents a significant repositioning into higher value channels and a strong performance by the Irish beef industry against the backdrop of declining consumer demand across Europe.
Meanwhile, the need to maintain the drive to further reposition and differentiate Irish beef continues. Sustainability is now emerging as a key interest area for consumers, and provides opportunities for Ireland to communicate the positive environmental attributes of Irish beef production. As part of its programme to continue to build a credible proposition around Irish beef production, Bord Bia is currently working with Teagasc to carry out a full life cycle analysis of Irish beef production, which aims to quantify its environmental performance. In addition, an environmental audit of a sample of Bord Bia quality assured farms is being undertaken to benchmark the performance of different production systems. This work will inform Bord Bia’s sustainability communication programme with key customers and European consumers with a view to firmly establishing Ireland as The ‘Sustainable’ Food Island.
Finally, increased market access remains a priority in terms of securing the maximum possible return from all products and particularly from by-products of the beef industry, and Bord Bia continues to work closely with the Department of Agriculture and Irish Embassies abroad to secure access in key markets.