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AHDB Cattle and Sheep Weekly

14 July 2014

EBLEX Cattle Weekly - 11 July 2014EBLEX Cattle Weekly - 11 July 2014

Prime cattle prices level for a second week

In week ended 5 July, the deadweight cattle trade levelled for the second consecutive week. With supply and demand in such tight equilibrium small movements in either are likely to be the determining factor in pricing in the short term. In the latest week, AHDB/EBLEX estimated slaughterings were around 100 head up on the week, with more young bulls offsetting reduced number of steers and heifers forward. The all prime average price was less than a penny down on the week at 324.5p/kg. R4L steers were back a penny to 338.0p/kg while heifers of the same specification increased a penny to 334.1p/kg. Reports suggest that, while demand for higher valued cuts remains subdued at retail level, the fine weather and World Cup have created some demand for barbecue products such as burgers and steaks.

Gap between farmgate and retail price widens again

With farmgate beef prices falling to a greater extent than retail prices, the share of the average retail price which producers received fell one percentage point during June, to 46%. The latest figure means that the producer share of the final retail price has fallen eight percentage points since January. With the market operating as we would expect, with a lag between changes in farmgate prices and movements in retail prices, the latter fell on the month for the first time this year.

Agri benchmark data confirms high costs of production in the UK

Agri benchmark is a global network of agricultural economists using international standardised methods to analyse farms, production systems and profitability. Provisional analysis from their recent data indicates that, while farmgate prices in the UK are much higher than other parts of the world, we have some of the highest costs of production when compared to other grass and forage based systems. While our closest competitor, Ireland, has a similar average suckler cow herd size, the UK range is much greater. Irish producers tend to specialise, with suckler cow farms selling calves to specialist finishers. Despite having a similar forage based system as the UK, Irish farmers have a lower reliance on compound and purchased feeds, higher stocking rates, and better growth rates that may be attributed to their grass and forage management. The majority of Irish farms are family farms using unpaid labour and around 55% of farmers work off-farm, in mainly non-agricultural jobs, to supplement family income.

The data also shows that the UK has a lower labour productivity than many countries, mainly due to them managing larger numbers of cattle per labour unit. While feedlots obviously achieve high labour productivity, the UK is only average when compared to other countries with pasture and silage based systems, such as Germany, Italy, France, Austria, Sweden, Australia and South America.

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