Ireland Looks for Premium Niche for US Markets
IRELAND - The recent recommendation by US Agriculture agency, APHIS, to lift its ban on beef imports from the EU has been widely welcomed by the Irish beef sector. The ban was imposed in 1997 following concerns over BSE. Its removal represents an important milestone in restoring access to international market, writes Joe Burke, Meat Division, Bord Bia – Irish Food Board.
20 March 2012
2 minute read
Trade is likely to be able to resume from autumn. In the meantime, exporters will be identifying potential customers and assessing the competitiveness of the Irish offering in that market.
To-date this year, beef producer prices in the US have risen by 20 per cent in comparison to 2011 levels. Current steer prices are equivalent to €3.37/kg excl VAT, which is almost 90 per cent of the average EU price. Over the period from 2008 to 2010, US prices averaged just 70 per cent of the EU price.
Naturally, higher producer prices have pushed up the price of beef at consumer level. The USDA reports that retail prices increased by nine per cent during 2011. This is encouraging as it offers more potential for exports from Ireland. The following bar chart compares the wholesale prices of some of the major prime beef cuts in the US with the prices available in the UK market.
As the chart shows, the prices prevailing in the US for most of the primal cuts are somewhat lower than the prices available in the UK, Ireland’s most important export market. The value of manufacturing beef, or VL’s, in the US is slightly ahead of UK prices. However, high transport costs would make it difficult to supply these products from Ireland.
The vast majority (>90 per cent) of US prime beef comes from animals finished intensively in feedlots using growth promoting agents approved by the USDA. ‘Natural’ beef refers to a growing niche in the market whereby animals are raised without the use of hormones or antibiotics. This segment is currently valued at almost $500 million per annum, which also includes ‘organic’ and ‘grass-fed’.
Importantly, beef imported into the USA may also be sold as ‘natural’ once the process has been verified by the USDA. Since ‘natural’ beef typically commands a price premium of between 10 and 15 per cent over conventional beef, this is where the Irish offering would need to be positioned in order to be competitive in the market.
