Outlook 2023: Beef prices likely to ease as input costs soar

Prices for prime cattle and cull cows are likely to ease in 2023 from the record levels seen in 2022.

The highs of the past 12 months were mainly driven by tight supplies and strong demand from the food-service sector as eating out venues reopened.

Over the next year consumers are expected to cut back on expensive meats due to the cost-of-living crisis.

See also: Beef performance – case studies and advice

However, falls should be limited by tight EU and worldwide supplies and historically firm international prices, say consultants Ben Burton and Charlotte Dun.

Trade friction caused by Brexit appears to be in the process of being overcome.

Export volumes increased significantly in 2022, but shipping and freight costs are up and disruption at ports due to staff shortages could remain an issue.

On the import side, New Zealand and Australia continue to target Asian markets, which are nearer to them geographically and to date have offered good returns, with lower freight costs than those incurred when exporting to the EU and UK.

However, average levels of imports of fresh and frozen beef from European countries such as Germany, Poland and Ireland have increased on previous years.

Total UK beef production is expected to have increased by about 2% for 2022, bolstered by a high throughput of cull cows.

Calf registration and slaughtering data suggest some further moderate growth in UK beef production in 2023, as more beef-cross calves come through from the dairy herd due to the increased use of sexed semen to breed dairy heifer replacements.

Higher farmgate prices have gone only some way to offset the unprecedented increase in input costs, most notably in feed, fertiliser and fuel, following Russia’s invasion of Ukraine.

However, underlying inflationary pressure across all cost categories will be significant going into 2023.

Higher feed costs, together with fodder shortages following the dry summer of 2022 and strong cull cow prices, could accelerate the long-term decline in the size of the UK beef breeding herd.

The reality for many livestock farmers going into 2023 is that the cashflow implications of the increasing cost of fertiliser mean they will have to reduce the amount they use.

If output and overall business profitability is to be maintained, these businesses may have to consider implementing longer-term strategies to reduce reliance on manufactured nitrogen fertiliser.

Despite clean cattle prices being at record highs, store cattle prices have remained relatively flat.

A two-tier market has developed, with good prices being paid for strong stores for quick finishing, but weak demand for lighter animals.

Finishers have been reluctant to pay high prices for cattle that will spend a long time on farm, given the pressure on margins caused by substantially higher costs, notably feed.

Lacklustre store prices, coupled with declining direct support payments, put the upland suckler herd in a particularly vulnerable place. More reliance is likely to be placed on the dairy herd as a source of beef calves in future.

Advanced genetics used to breed dairy beef cattle are continuing to develop each year to identify and implement heritable traits that can help to reduce the cost of production.

With the cushion of direct support payments decreasing, all beef producers will need to become more focused on returns excluding this income stream.

Performance recording, benchmarking, taking a scientific approach to feed ration calculations, making better use of forage and using genetics to improve animal performance are all gradually becoming more commonplace in the sector.

We are likely to start seeing a divide between efficient finishing units turning over large numbers of cattle in a short period of time and more extensive, native-based units finishing cattle on grass diets over more extended timeframes.

With regard to extensive units, there is no specific support funding available. However, native breed cattle fit in well with some High and Mid-Tier Countryside Stewardship options, where they can help improve biodiversity. 

While there may be opportunities to take advantage of the increased provenance of extensive beef, farmers need to be prepared to take their produce to the consumer, whether through farmers markets or social media platforms.

They will need to meet the demands for popular cuts and try to make use of, or educate consumers on preparing, less popular cuts.