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The announcement by Tesco Ireland on maintaining prices paid to factories for beef will have negligible impact on prices paid to farmers for cattle.
Supermarkets don’t buy cattle or beef carcases, they cherrypick the parts of the carcase that sell best and leave the factory to find markets for cuts that they don’t want.
It is the value that is realised by factories for all the component parts of the carcase as well as the sales to supermarkets that decides the price paid to farmers.
UK more important than Ireland for Irish beef sales
Tesco Ireland is a relatively small customer overall for Irish beef, given that between four and five more times Irish beef is consumed in the UK as is in Ireland.
Of course, when Tesco UK is added to Tesco Ireland, it makes Tesco overall a major customer for Irish beef cuts. There is no mention of Tesco UK being included in this price commitment.
Beef factories and specialist retail packers do virtually all of the preparation of beef on sale in supermarkets
Historically, when supermarkets packed their own beef, they did buy carcases from Irish factories and were therefore responsible for finding a use for each part of the carcase.
Over time, butchery was removed from supermarkets and they switched to buying cuts from the carcase rather than the full carcase itself.
Beef factories and specialist retail packers do virtually all of the preparation of beef on sale in supermarkets, with the exception of small-serve over counters. Many of these have been closed during the present COVID-19 crisis.
Ultimately, a decision by a supermarket to maintain the price it is paying for the parts of the carcase they want will have minimal impact on the value of the carcase when the value of the parts they don’t buy is in freefall.
Supermarkets cannot offset fully the loss of restaurants and fast food chains to carcase value just as they in turn wouldn’t offset the loss of supermarket business if it was the other way round.
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