Farm Ireland
Independent.ie

Friday 22 September 2017

Another 5c/kg cut from steer base quotes

Joe Healy

While the Revenue launched a big raid on a house in Tipperary last week, the beef factories are continuing to raid every beef finisher in the country.

They seem relentless in their attempt to get steer base quotes down to €4/kg. If beef farmers can afford to travel to Galway Races this week, their best hope of coming into a bit of money would be to back a few good horses. At current prices, they are losing substantially on beef due to the huge costs throughout the past year. A further 5c/kg has been pared off steer base quotes to a range of 410-415c/kg. It is a similar story for heifers who are now at 420-425c/kg. Some finishers are securing a tad more.

A number of farmers expressed their dissatisfaction to me recently regarding the base price for non-quality assured cattle, which can be 10-15c/kg behind the base for quality assured (QA) stock. They maintained that they were losing not only the 12c/kg QA but also a further 15c/kg, leading to a total loss of 27c/kg or approximately €100/animal if the animal is not quality assured. This is excessive but there is a lesson in there for farmers too. The best of the bulls on offer are making 410c/kg while the R grades are generally around the €4/kg. O-grade bulls are making between 370-380c/kg.

Cow prices have held reasonably steady, with U grades commanding prices of 360c/kg. R-grade cows are at 330-350c/kg. Prices for Os range from 320c/kg to 330c/kg. P grades are at 300-320c/kg.

At a meeting with factory bosses yesterday, IFA president, John Bryan, expressed the growing anger of livestock farmers at the massive drop in cattle prices over the last five weeks.

He claimed the factories' action was sapping confidence from the entire sector and would result in an exodus of suckler cow farmers.

Livestock chairman Henry Burns maintained the attack on cattle prices had left farmers feeling they were paying for the costs of the horse meat scandal.

He accused beef factories of cutting cattle prices by 35-50c/kg across the different categories or €130 on steers, €150 on heifers and €145 for cows since early/mid June.

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He added: "Price cuts of this magnitude are inflicting severe financial and income damage on livestock farmers and acutely eroding confidence across the livestock sector."

"In contrast, cattle prices in our largest export market in the UK have remained relatively stable, with Bord Bia reporting the most recent R-grade steer price at £4.07/kg for July 19, which is equivalent to €4.97/kg including VAT."

Recent ICBF data showed a 29pc increase in beef cows leaving the herd and a 7.4pc drop in calvings this spring.

"Factory price cuts, combined with other factors, have also impacted negatively on store and weanling prices. Male store cattle are back €60-100/hd on last year. Heifer store prices are back €75-100. Weanling bulls are back €70-110 and heifers are back €100-125. Beef price cuts and store and weanling price falls of these levels will impact very negatively across the incomes of all livestock farmers this year," Mr Burns insisted.

Meanwhile, Bord Bia reported a further easing in the beef trade last week in response to higher supply figures. The best trade reported continues to be for in-spec cattle.

Base prices quoted for R-grade steers under the Quality Payment System were €4.15-4.20/kg. Quotes for heifers were €4.25-4.30/kg. Export meat plants paid an extra 12c/kg for in-spec QA stock. O-grade cull cows were making €3.20-3.35/kg. To date this year, cattle supplies are running 72,400hd higher than last year. The majority of the increase is evident in the steer and cow category.

In Britain, trade is reportedly flat as demand remains subdued across retail and food service channels. Demand continues to be affected by hot weather conditions as consumers remain reluctant to purchase. Reported cattle prices from the AHDB eased slightly over the past week with GB R4L grade steers averaging at £407.6 p/kg dw (equivalent to 497c/kg dw) for the week ending July 20.

On the continent, trade is being helped by ongoing tight supplies across the different key export markets, although higher than normal temperatures across some of our key markets is affecting consumer demand for beef. Best demand reported is for knuckles.

Across the main EU markets, cattle prices have been relatively stable with Bord Bia reporting the average R3 bull price back only 7c/kg from mid-June to mid-July.

The number of cattle slaughtered in June 2013 was 8.9pc higher than in June 2012. A comparison of figures for January-June 2013 with the corresponding 2012 period shows that cattle slaughterings increased by 10.0pc.

Elsewhere, the latest long term outlook report released by Brazil's Ministry of Agriculture, Livestock and Supply points to increased meat production over the next ten years. The expansion in production is expected to show the greatest increase in poultry, beef and pork, respectively.

Total Brazilian beef production will increase by 22.5pc in the next 10 years to reach 10.9 million tonnes by 2022, while its exports are forecast to increase by 29pc over the same period to 1.88 million tonnes.

Irish Independent