LMC Report: Increased Exports Of Finished Cattle To GB

NORTHERN IRELAND,UK - Over the last year there has been continuing debate as to the reasons behind the price differential between NI and GB.

29 January 2010

3 minute read

Europe

At times the price differential has been between 40-50p/kg for certain grades and this has caused much concern among producers. This differential still exists in 2010 and in early January the difference in price between NI and Scotland for R4 grade steers was 35p/kg. A few producers have taken a very logical approach to this price differential and instead of marketing their cattle in NI, have slaughtered their cattle in GB, thereby availing of the better price available there.

In 2009, over 10,000 head of cattle were exported to GB for direct slaughter. This represents just under 200 head per week, or approximately 7 lorry loads. This figure was up from just under 6,000 head in 2007 and 7,500 head in 2008 (Figure 1). Around 40 per cent of these cattle were exported in the last quarter of 2009, a trend consistent with previous years. This means that in October, November and December 2009 an average of 300 head per week were being exported from NI to plants in GB. What is notable however, is that this trend has continued into 2010, with almost 1,000 cattle being transported across the Irish Sea for direct slaughter in the first four weeks of the year. This represents a marked change from the trend in 2006-2009 when the level of exports to GB for the whole of January was typically less than 400 head. This may concern processors who will not want to see an emerging trend of cattle being exported on the hoof to GB whenever domestic supplies are already tight. However, with such a consistently wide differential between prices here and prices in GB, it is only logical that producers in a position to export to GB, do so.

Coupled with this increase in exports to GB plants, is the voluntary cessation of cattle imports for direct slaughter from GB by the NI plants, due to concerns about Blue Tongue. Only 33 head were imported by the NI plants from GB in 2009 (the majority, 28, in the first quarter), down from more than 11,000 head in 2008. This means that in 2009, the NI industry exported more finished cattle to GB than it imported from GB. The opposite was the case in 2008 (Note: Figure 2 shows totals for GB and ROI together).

This trend of increased exports to GB comes against a backdrop of an increase in imports for direct slaughter from ROI. Last year, 36,000 cattle were imported by NI plants from ROI, 2.5 times the number of finished cattle imported from ROI in 2008. This level of imports represented 8 per cent of the total kill, compared to 6 per cent in 2008. In the final quarter of 2009, imports from ROI seemed to tail off. However, in the first four weeks of 2010, there is evidence that this trade is regaining momentum, with over 700 head of finished cattle imported from ROI last week. This increase in imports from ROI in 2009 coincided with a reduction in exports for direct slaughter to ROI by NI producers, with numbers down by 50 per cent in 2009 compared to 2008(Figure 1). This trade remains sluggish in the first four weeks of 2010.

From an overall perspective, the high level of imports from ROI meant that NI was a net importer of finished cattle in 2009. Around 19,000 head were imported on balance when all imports and exports of finished cattle to and from GB and ROI are taken into account (Figure 2).