Michael Collins on cattle slaughter delays and the price gap
Michael Collins questioned officials about recent delays in cattle slaughter and why Irish farmers are receiving lower returns despite strong export values. He pinpoints supply-chain disruption, contract shortfalls and increased imports as the principal pressures facing the beef sector.
Immediate issue: slaughter delays and capacity
Michael Collins highlights that delays in slaughtering have been reported around the country, though not uniformly. He explains processors are operating around 80 percent capacity, cold storage is scarce and many plants are processing only to existing contracts, which are currently reduced.
Export flows and contracts
Collins notes a roughly 10 percent drop in output going into the UK, which has left contracts thin and contributed to processing backlogs. He expects the situation to work through the system in the short term but warns production may scale back slightly while the market readjusts.
Price comparison and import pressure
On prices, Collins examines why EU cattle prices sit above Irish levels and reminds listeners that transport and market premiums influence comparisons. He also flags growing competition from imports-particularly from Australia, where shipments to the UK have surged-creating longer-term pressure on domestic returns.
Outlook and implications
Collins frames the current problems as sector-wide supply-chain dysfunction rather than uniform failure at individual plants. He urges monitoring as the market stabilises and signals that import trends and contract availability will determine whether Irish producers can reclaim stronger margins.
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Thanks, thanks, thanks Chairman, and I just welcome the guests. Just a few brief questions. Why in light of less tonnage of beef exported and record monetary value of tonnage exported, why have farmers been hit with taking 120 less kilo for cattle slaughtered? Sorry, have delayed cattle for slaughter, is that it? Yes. Do you want me to answer that? Yes, if you don't mind. Well, they have to some extent, and I've heard a lot about it when I've spoken to the farm organisations around this particular issue as well, and when we talk to members, yes there are delays. They're not lengthy delays and not in all processing plants, nor is that the case. I think the problem was a little bit more difficult probably about four to five weeks ago, but that has been ameliorated quite considerably. In large part, the issue that we face in the sector is one where the supply chain is not functioning, and so therefore what's actually happening is, and what always happens, and what was always the case in a regular market scenario where the market is relatively stable, is we have sufficient capacity of indicated area. We're working at about 80 per cent capacity at the moment. We would normally be working in that first quarter of this year at full capacity, and we can cope with that in all circumstances, except when the market is not functioning, and effectively that's what's happening at the moment. So there isn't a cold store in the country that you can find capacity to put process product, and I had that fully verified yesterday and again this morning, and the scenario is that what you actually do when you're processing is you're processing to contracts, and the contracts are not there at the moment. They're not there at the level that they would normally be expected to be there because we've dropped 10 per cent in our output going into the UK, and that's essentially the problem we're facing at the moment. Now I think we expect that position to work its way through the system over the next short while, and we also know that the scale of production likely to come will scale back a little bit for the next short while as well. So hopefully that balance will be there, but I don't think the problem is as great as has been suggested, nor as comprehensive across the country. Okay, thank you. And why is EU cattle prices one euro per kg ahead of what Ireland is paid? Do you want to take that? Deputy, we always face a challenge, I suppose, exporting into these markets. We're the number one exporter into many of the markets, including the UK. There'll always be a premium for UK beef produced in the UK market under the Red Tractor brand. So our objective is to try and maintain that position as the number one importer, and we still very much are in that space, but as the Chair has said, Philip has said, we're coming under more pressure from imports now, particularly from the likes of Australia, where imports have soared by over 400%. They now have an unrestricted quote of about 30,000 tonnes per annum, and that's going to grow over the next 15 years, and after 15 years that trade is going to be fully liberalised. So we do have challenges there long term into the UK market. If you look at the price tracker across the board, I think we're running about 20 cent behind EU prices at the moment in terms of the prime composite price versus the export benchmark price. So that's where it should be. The price doesn't include the cost of transport and getting that product to the European markets, so there should be a deficit there in terms of the price that we're achieving. Last year, of course, we ran ahead of the EU price, and that was solely down to a bit of concern in the marketplace around supply. There was a lot of concern that there was going to be cattle constraints in Australia, the US and other markets, so there probably was a little bit of panic buying last year, and we benefited from that. Because we're the first importer of choice, we were able to reap the benefit of that.
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