10th April 2012

ICSA beef chairman Edmond Phelan has warned,  “the beef sector is on thin ice with the potential for serious losses mounting against a backdrop of beef prices remaining stagnant at a time of the year when beef price needs to be rising to cover the high costs of winter finishing.”
 
“Farmers have been paying exceptional prices for stores over the past six months, with a clear anticipation that beef price will continue to rise.  However, while there are no grounds for price cuts in the short term, the reality is that beef price can only go so high and that point has likely been reached already.  Further price rises will require a major improvement in economies across Europe and an inflationary environment.  A weakening of the euro against sterling is also a necessary ingredient if prices are to increase but there are little signs that these factors will fall into place in the short term.”
 
“With costs continuing to rise, farmers need to be very cautious and much closer analysis of costs and margins is essential.  It seems clear to me that there are plenty of farmers going to marts who are not doing their sums or who have unrealistic expectations of further significant price increases.”
 
“The current environment shows the naivety of calls for 40% increases in beef output or any return to coupled payments.  The beef market is very sensitive to fluctuations in supply, while demand is not growing at a sufficient rate.”
 
Mr Phelan criticised meat factories that, he said, “are keen to return to the old ways of low prices and high volume.  They need to send a clear message to supermarkets that €4 is now the minimum price required for autumn beef and that winter finishers need at least 30c more.”