Buoyant global demand brings cheer to beef sector
A new analysis of the outlook for the beef sector in Wales and the rest of the UK, compiled by levy board Hybu Cig Cymru-Meat Promotion Wales (HCC), has pointed to crucial global factors which may give farmers cause for optimism, despite uncertainties at home.
Over the past 12 months, farmgate prices for beef cattle have hit record levels. In the early months of 2023, steers consistently fetched close to the £5 per kilo mark in the deadweight market. The average price in England and Wales sat at £4.85 per kilo at the end of March – 17% higher than the levels seen in 2022, and 33% higher than the five-year average for the time of year.
The report, part of HCC’s Between the Lines market insight series, points to significant challenges for both farmers and consumers at home. GB retail figures suggest that domestic consumers are feeling the cost of living pinch, with the proportion of beef sold as cheaper mince products increasing to 54%, which has an impact on the profitability of the supply chain.
Also, farm input costs, although lower than they were in the immediate aftermath of Russia’s invasion of Ukraine last year, are still historically high, putting pressure on farm business margins.
However, an analysis of global data suggests that worldwide demand, which has helped to underpin farmgate prices, will continue to be buoyant. In 2022, the volume of beef exports from Wales jumped by 20% on the previous year, with the trade worth around £75 million to Welsh farmers and processors.
HCC’s Intelligence, Analysis and Business Insight executive Glesni Phillips, said: “By looking at cattle population data, we can see that beef production in GB as a whole is set to increase slightly in the short term. Given the challenges we face in terms of the impact of the cost of living crisis on British consumers, this could have led to a shift in the balance of supply and demand and a fall in farmgate prices.”
“However, a tight global supply of beef is likely to continue to have a significant impact,” she said. “Production may be set to increase somewhat in GB and some other countries such as Brazil and China in 2023. But this is offset by likely reductions in output in Europe, including Ireland, and a significant fall in the amount of beef produced in the USA.”
Glesni added: “These factors should give some confidence to beef producers in Wales over the next 18 months.”
HCC’s report is available here.