Meat prices will suffer if premium cuts are frozen to manage the collapse of foodservice demand under EU Private Storage Aid proposals, according to the Livestock and Meat Commission for Northern Ireland (LMCNI).
Reports from processors have indicated significant difficulties in selling steak meat in particular during the last few weeks following the shutdown of the foodservice market, with many plants opting to freeze products prior to this announcement.
“While this announcement of Private Storage Aid may provide some short-term respite to the beef and lamb markets, it is worth noting that freezing products, and in particular steak meat, reduces the value of individual cuts on the marketplace. A reduction in the value of the most valuable cuts, in particular, will inevitably result in a weakening in deadweight prices.
“Also any products placed in storage under the Private Storage Aid scheme will come back onto the market between three and five months later. This could potentially have a detrimental impact on the deadweight trade further down the line if it creates an imbalance between supply and demand.”
Meat and dairy
The European Commission has proposed exceptional measures to help the agri-food sector, including meat and dairy, cope with the impact of COVID-19. The measures are expected to be worth €80m, €46m of which will be available to the beef and sheep meat sector.
They include Private Storage Aid, flexibility for market support, and derogations from EU competition rules. Draft regulations were distributed to EU member states earlier this week, with a vote expected on 27 April.
The Private Storage Aid scheme would allow the temporary withdrawal of products from the market for a minimum of two to three months and a maximum of five to six months. This would lead to a decrease in available supply on the market and rebalance the market in the long-term.