EU beef demand stays strong, despite horsemeat scandal

The report revealed that EU beef prices stabalised in Q1 2013, suggesting that the horsemeat contamination scandal did not have a big impact on beef purchasing habits in Europe and elsewhere.

Rabobank analyst Albert Vernooij said: “The horsemeat issue was one of mislabelling rather than food safety, which means it has had limited impact on consumer demand. Furthermore, contamination incidents were discovered only in processed products. The result is that even in the horse-loving UK, consumers remain confident in the quality of fresh beef.”​

He added that the only long-lasting impacts of the scandal were likely to be increased regulation on traceability and labelling.

“This regulatory response, coupled with a lower availability of beef in the coming years, could trigger a significant increase in the number of dedicated supply chains,”​ he said.

Although EU prices for beef stabalised in the first quarter, the Rabobank Global Cattle Price Index remains 8% down year-on-year.

The report stated that US beef prices were a “big disappointment”​ in Q1, with a strong US dollar and the temporary ban on US chilled meat exports leading to a 12% fall in exports.

Domestic retail sales were also down, with increased taxes and high fuel prices impacting on consumer demand.

“The combination of this low export and domestic demand with high grain prices, less-than-anticipated declines in beef slaughter and subsequent beef production, has resulted in losses to cattle feeders of US$100-US$200 a head,”​ said the report.

The report predicted that the Latin American countries of Brazil, Uruguay and Paraguay were expected to perform well as the result of increased herd sizes and good export growth.

Australia and New Zealand, meanwhile, are facing low prices as a result of poor weather, which has resulted in farmers sending more animals for processing.

However, Australia and New Zealand are benefiting from extremely strong growth in exports to China as a result of flat domestic production growth, the report added.