Business Farming

Sunday 25 September 2016

Beef: Getting 'stuck in' at the mart is good for the ego but hard on the pocket

John Heney

Published 23/03/2016 | 02:30

Marie and Ann Hester, Castlerea, Co Roscommon watching the judging of the bulls at the Irish Limousin Show and Sale at Tullamore on Saturday.
Marie and Ann Hester, Castlerea, Co Roscommon watching the judging of the bulls at the Irish Limousin Show and Sale at Tullamore on Saturday.

Once again nature has demonstrated the huge difference between theory and practice as far as farming is concerned. When conditions are not right, as was the case up until last week most of what the "experts" say goes straight out the window. The secret I guess is to make the best of whatever conditions nature sends our way.

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Luckily for me the current fine spell arrived just in time. With my supply of silage running low, getting two pens of cattle out in mid March was a great bonus - however it will be some time before I forget the miserable few months which we have just experienced.

I suppose what I found most frustrating was waiting week after week for the ground to dry. I rely on slurry a great deal as fertiliser for silage, but just when the ground appeared to be drying out, the rain would return again.

Eventually I did succeed in getting my tanks half empty but it was quite a battle. Unfortunately when the fine weather eventually arrived it was too late to spread lime on the grazing fields.

While I was feeding my cattle on some of those miserably wet mornings I couldn't but feel very glad for the major advances in farm mechanisation.

Sitting in the air-conditioned cab of my 10-year-old tractor (1- years means "new" as far as cattle farmers are concerned) feeding the cattle in the slatted shed, I thought of the hardship endured by farmers down through the years.

Feeding bales of hay to cattle sheltering behind ditches and hedges as the sleet and rain poured down wasn't very pleasant. Before that it was a case of having to tackle-up a horse and dray car and load it with loose hay which doesn't sound that appealing either.

In spite of all these advances we still have plenty to worry about. Concern continues to grow amongst beef finishers that this year could turn out to be a disaster. Interestingly in-spite of the disappointing prices being paid for beef, the trade for replacement cattle remains very firm.

Even though I continue to survive with cattle farming as my sole income, I have often found the cattle business to be little more than a glorified lottery, however there are some basic truths which never seem to change.

When you're buying-in stock you are always competing with a ringside full of potential buyers. On the other hand when it comes to selling your finished animals, in the absence of a live export trade there are only a small handful of processors to whom you can sell your stock and they decide the price they will give you.

In what appears to have become an annual ritual these processors are perhaps justifiably accused of not paying enough for our beef cattle, however rather than blaming them for everything, a cattle finisher could look a little closer to home.

For instance controlling input costs and the price they pay for fancy type store cattle might be a good place to start.

Of course we all know that when you go out to buy cattle you cannot dictate the price you pay. You may feel that it's total madness, but you have little choice but give whatever price the market dictates on that particular day.

Emotional state

But what are the main factors which dictate the price which I and other cattle farmers pay?

Aside from the panic buying with seems to occur each spring when grass starts to grow, confidence or lack of confidence can be a major issue. When the price of beef rises everybody seems to be out buying stores. On the other hand in a falling beef market, even at far lower prices, buyers for store cattle can be few and far between.

Last year the value of sterling had a huge effect on the price of cattle. While it may have had a positive effect on the price paid by the processors, we must not forget it also affected the price of store cattle. At the moment farmers are quite right to be very concerned about the likely consequences which a reversal in the value of sterling could have on their profit margins this year.

There is also a very interesting psychological side to buying at an auction.

An article published in the Harvard Business Review titled 'When Winning is Everything' highlights an adrenaline-fuelled emotional state called "competitive arousal".

This is the single-minded pursuit of victory which can blind a person to the true costs of a deal. The article also argues that the presence of an audience at an auction, particularly one that's highly engaged such as at a mart, increases this psychological arousal.

It's only fair to expect that farmers like all other business people are not immune to this phenomenon.

How many times have we seen two buyers get "stuck" into each other and set what is probably a record price for the 'nice type' of a bullock which they both fancy.

The reality is that the real consequence of a glorious "win in the ring" is a much reduced profit margin. After all every extra euro paid for a bullock is a euro less in profit at the end of the year

The only certainty however is that human nature guarantees that this is a phenomenon which will never change and thank God for that I can hear people who sell store cattle, saying.

As if to highlight how really strange the beef business is, during a recent episode of UTV's farming programme Rare Breed - A Farming Year, a beef tasting trial carried out in a fashionable Dublin restaurant found that beef from a Friesian animal came in ahead of meat from both Angus and Hereford animals.

If you excuse the terrible pun it really would give you food for thought!

John Heney farms at Kilfeacle, Co Tipperary

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