Beef in Austria more expensive than ever – for how long?
After two and a half years of depression, beef cattle prices rose sharply in Austria this spring. In Germany the prices are even higher. How can that be? top agrar-Austria spoke to Arge Rind Managing Director Werner Habermann.
Beef cattle prices have increased considerably in the last six months. What were the causes?
Haberman: The current base price in Austria of €4.62 per kg SG (young animal R2/3) was unimaginable a year ago. The high flight is mainly a consequence of the previous depression. We had two and a half years with extremely low prices. In this search, the basic price for slaughter animals has barely exceeded €3.50. The low point was the first corona lockdowns in spring and summer 2020. Only in summer 2021, with the opening of gastronomy and tourism, did prices rise again.
Prices in Germany are currently €5.30/kg SG, which is almost a third higher than in Austria. How can that be?
Haberman: It is true that we have lost something compared to the German prices that have been with us for a decade. However, the price difference must be clearly put into perspective. Many of our farmers produce in quality meat programs and in these, significant additional income per kg slaughter weight can be achieved. If these quality surcharges are included in the price comparison, the price difference is around 30 cents.
On the current German cattle prices
Germany is the price engine for all of Europe. Why?
Haberman: Many German cattle fattening farms listened. This means that our neighboring country was missing 10 to 15% of production at the beginning of the year, and even up to 25% in Bavaria. A structural break is underway there. German politics is taking leave of the world market. The country will permanently revert to self-sufficiency, if not net imports. But since the battle capacities are still unchanged, there was already a 20% surplus of battle hooks. Therefore, there was extreme competition for slaughter cattle on the German market, which is also pressing in on us.
More and more Austrian farmers from the border regions are marketing their bulls and cows for slaughter in Bavaria. A longer-term trend?
Haberman: There have been individual farm attempts to market animals in Germany. Despite the price difference on the market, these farms were unable to gain any added value, since a pre-cost flat rate of €50 had to be paid for each animal. Since the German market has also turned around in the meantime and there is a clear oversupply of animals ready for slaughter, there can be no talk of a trend here.
Germany already purchases large quantities of beef from abroad. After the Netherlands, Austria is the second largest importing country there. How important is the neighboring country for us?
Haberman: During the corona pandemic, no other country apart from Austria was able to increase beef exports to Germany. SO that export marketing to Germany became possible at all, we implemented QS recognition and certification as part of the AMA seal of approval several years ago. We are in the pioneering role here and I therefore see great potential in the future to make up for the missing beef quantities in Germany with Austrian production.
Imports of beef from South America have plummeted. There are currently hardly any goods on the European market. Where do these countries ship to now?
Haberman: Is correct! Due to the low demand in Europe, triggered by the lockdowns, export countries such as Argentina and Brazil have discovered the Asian market as an alternative export destination. There, entire beef companies have even passed into majority Chinese ownership. South American beef is currently no longer represented on the European market. Parts that are in demand cannot be ordered at all because they are sold out. The European warehouses are empty!
does it stay that way
Haberman: I believe that in a year or two, more meat, especially high-quality cuts, will be imported into the EU from South America. Then at the latest we need an indication of origin. In Austria we produce climate-neutral beef. We have 14.2 kg of CO 2 emissions per kg of beef, while Brazilian beef emits 80 kg of CO 2 ! Consumers need to know that.
The dynamics on the slaughter cattle markets have calmed down and prices have stabilized at a high level. Can the farmers finally take a deep breath?
Haberman: The German slaughter cattle market has turned significantly in recent weeks and the price has fallen by 80 cents as a result. The demand has quickly calmed down everywhere, at the same time the slaughter quantities are significantly larger. The farmers may have held back bulls for weeks, which then rushed to the market. Yes, the improved prices give cattle farmers a breather. However, farmers also have to cope with record price increases for feed and energy. Against the background of the past dry spell, the currently high prices are necessary to offset the losses.
How will consumers react to beef price increases?
Haberman: The price increases are now reaching consumers with a slight delay. If consumer prices are increased by around 20%, then this may show a drop in consumption. Switching to pork or poultry seems unlikely, since prices will also rise there.
In addition to bull prices, prices for slaughter cows have also skyrocketed. How is the market situation there?
Haberman: The Austrian slaughter cow market is purely an export market, so prices there fluctuate greatly. as e.g. For example, when more cows were slaughtered at the end of 2021, prices immediately fell from just under €3/kg to €2.70. At that time, the rule was to hold back cows and not slaughter them until the beginning of this year. However, the willingness of Austrian farmers to sell cows for slaughter was also low in the spring and export demand continued to be very good. In the same period of the previous year, the price rose from €2.34 to €3.71 per kg.
How can the fluctuations be cushioned in the future?
Haberman: Controlling the market is crucial. The Arge Rind always makes recommendations as to when cows should come onto the market. We also have a good partnership with retail chains. The annual plan usually meets in December. This year, however, there were already two rounds of adjustments due to the extraordinary development. The Austrian model of producer groups thus cushions the extreme pendulum swings on the world market.
How are things going in the medium term?
Haberman: We are now at the end of April. Prices have always fallen at this time of year for the past 30 years. Due to the current exceptional situation, it is likely that the high price phase will last longer. However, there will not be an “all-time high” for two or three years. I expect that South America will come back onto the market and that the maximum prices in Germany will not last forever either.