1

Meat Industry Ireland

Presentation by

Joint Oireachtas Committee on Agriculture4th March, 2014

2

Overview

• Snapshot of where we are

• Beef Industry performance over the last decade

• Current market situation

• Market specifications

• Young bulls

• Real threats & challenges

• Conclusions

3

Snapshot – a lot done under FH2020

• 40% increase in finished cattle price over last 4 years

• Additional €1.5 billion to Irish beef farmers

• 101% of EU male cattle price / 107% of ‘all-category’ EU price

• 3rd highest steer/cow price; 5th highest heifer price

• €2.1 bn beef exports in 2013 (+10%)

• Irish beef exports have increased by almost 35% since 2010

• Moved from 75% to 87% QA coverage

UK Continental EU

Int. Markets0

50

100

150

200

250

237211

5

250214

8

+5%

+60%

+1%

Irish Beef Exports 2013472,000 tonnes

+4%

€2.1bn

+10%

Ireland exporting

90% of beef

output

4

5

Irish Beef Sector

Performance of the last decade

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Irish beef listed with more retailers than beef from any other origin

75+2001 2014

27

7

Sales of Irish beef to Retail (‘000 tonnes cwe)

Source: Bord Bia

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(E)

0

50

100

150

200

250

8

Irish R3 Steer Prices, 2001 to date (c/kg)

Source: Dept. of Agriculture

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013200

250

300

350

400

450

c/kg

Cattle price up from €3/kg in 2010 to €4+/kg

Performance of Irish Cattle PriceR3 steers c/kg excl VAT

Jan 10

Mar

10

May

10 Ju

l 10

Aug 10

Oct 10

Dec 10

Feb 11

Apr 11

Jun 11

Aug 11

Oct 11

Dec 11

Feb 12

Mar

12

May

12 Ju

l 12

Sep 12

Nov 12 Ja

n 13

Mar

13

May

13 Ju

l 13

Sep 13

Nov 13

0

100

200

300

400

2010: €2.91/kg

2011: €3.44/kg

2012: €3.86/kg

2013: €4.07/kg

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10

Current Market Situation

Production, Consumption, Prices

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Market Overview• Consumption under pressure – weaker consumer spending

power• Many key export markets in recession• No significant promotional activity in beef category - beef

relatively expensive compared with chicken & pork;• Manufacturing beef trade weak• Significant volumes of additional pork on EU market due to

Russia ban• Significant stock levels across Industry – product not moving at

present• Irish cattle slaughterings up 7%• Production up in EU• UK prices falling since October – only starting to stabilise now

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GB Cattle Prices

13

France

Germany

Italy UK

Spain

Ireland

Netherlands

Poland200

400

600

800

1000

1200

1400

1600

2012

2013(e)

2014(f)

EU beef production trend 2012 - 2014

+2%

N/C.+0.8%

+2.6%

+7%+3% -1%

+1.0%

Source: EU working beef forecasting group

EU beef production declined by 2.2% in 2013.A recovery in production of 1.1% is forecast for 2014

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2009 2010 2011 2012 2013(e) 2014(f)6,400

6,600

6,800

7,000

7,200

7,400

7,600

EU beef consumption, ‘000 tonnes

Source: EU working beef forecasting group

Beef consumption decline in 2013

-2.1%

Retail sales of beef throughout EU

Italy (Jan to Dec)Volume : -3.7%Average price -2%Spain (Jan to Dec)

Volume : -4%Av Price +2%

Germany (Jan to Dec)Volume : -1.5%Average Price: +3.5%

France (Jan to Dec)Volume: -4.0% Av Price: +4.2%

G. Britain (52wks to 5 Jan)Volume: -2.9%Av Price: +7%

Home Market (52wks to 5 Jan)Volume: -5.0%Av Price: +4.1%

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-16.0

-14.0

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

-2.9-1.6 -1.5

-7.7 -8.1 -8.2

-14.5

Beef sold at UK retail - Annual volume change %52 wks to 5th Jan '14

% D

eclin

e in

Vol

ume

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Growing the success of Irish food & horticulture

Low consumer demand for beef is holding back the market, as rising beef prices in the past few years have turned some on to other meats.

Farmers Weekly 27/2/2014

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18

Jan '13

Jan '13

Feb '13

Mar '13

Mar '13

Apr '13

May '13

Jun '13

Jun '13

Jul '13Aug '13

Aug '13

Sep '13

Oct '13

Oct '13

Nov '13

Dec '13

Dec '13

Jan '14

Feb '14

250

300

350

400

450

Ireland R3 Steer vs. Continental Europe R3 Y. Bull(c/kg excl. VAT)

Ireland R3 Steers

Continental Europe R3 Young Bull

Producer Prices: Ireland vs. Europe

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Producer Prices: Ireland vs. Europe & UK

Jan '13

Jan '13

Feb '13

Feb '13

Mar '13

Mar '13

Mar '13

Apr '13

Apr '13

May '13

May '13

Jun '13

Jun '13

Jul '13Jul '13

Aug '13

Aug '13

Aug '13

Sep '13

Sep '13

Oct '13

Oct '13

Nov '13

Nov '13

Dec '13

Dec '13

Jan '14

Jan '14

Feb '14

Feb '14

300

350

400

450

500

Ireland R3 Steer vs. UK R3 Steer & Continental Europe R3 Y. Bull(c/kg excl. VAT)

UK R3 Steers

Ireland R3 Steers

Continental Europe R3 Young Bull

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Market Specifications• Steer / Heifer grass-fed – unique selling point – clear message from

consumers & key customers for years now

• FH2020 & Beef Activation Group reports highlighted market specification issues

• Post FH2020 MII members introduced QPS – rewarding quality

• In-spec bonus – QA and specification

• Young Bulls – UK retail requirement is for <16 month only. Limited opportunity for some older YBs in Continental markets – processor specific

• Must have Producer-Processor arrangement for YBs over 16 months. This has been clearly communicated by FH2020 Report and by Individual processors

• MII has prepared a draft Industry Communication to again highlight importance of specification adherence - farmer gets a better price & industry can better market the output

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Young Bull Kill – YTD(head/week)

05.01.14 12.01.14 19.01.14 26.01.14 02.02.14 09.02.14 16.02.14 23.02.142,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

Total kill up 7% ytd

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Real Threats/Challenges

• EU Trade Deals – Increased tariff-free imports• EU-Canada CETA• EU-US TTIP• EU-Mercosur

• On-Farm Efficiency• Significant advantage still to be achieved behind farm-

gate• Industry has supported initiatives

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Conclusions• Strong beef sector marketing performance & price delivery

• Weakening price due to market conditions, but prices still at upper end of EU market

• In-spec essential – will deliver the best returns

• Industry responding to short-term supply issues

• Positive outlook in medium term

• Challenge – Trade Deals / On-farm productivity