Farm Ireland
Independent.ie

Sunday 11 December 2016

It's a gamble to buy stock on the back of SFP talk

Declan O'Brien

Published 03/05/2011 | 05:00

The continued buoyancy in the cattle trade is a welcome development. Thomas Jordan of Ballymote Mart reckoned that current price levels haven't been equalled in more than 30 years. Suckler farmers might get a return for their efforts this year. And who could begrudge them that?

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John Shirley has always claimed that the men and women who lamb ewes and calve cows are the real wealth creators in Irish farming.

And, when you think about it, there is a lot of truth in that assertion. It is the new-born animal that is the basis for all the transactions that follow.

However, any lift in cattle prices must be informed by a reasonable expectation of a lift in beef prices. And while that is the case at the moment, the fear is that returns this winter might not match the level of price increase in the marts.

Interestingly, prices across the board are up 20pc in Clare Marts, while the average increase in factory quotes was 15-16pc.

However, there is another factor at play here.

According to the rumour mill, the years 2010, 2011 and 2012 will be a new reference period for the single farm payment and that stocking levels over this period will directly impact farmer payments after 2013.

This is merely conjecture and speculation.

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The same rumours were trotted out at the time of the conacre lettings last autumn and they're getting another airing now.

In fact, the whole historical basis for payments is opposed by the current commissioner, Dacian Ciolos. He favours moving to a flat rate per hectare payment which would take no account of stocking levels.

The Commission is currently preparing proposals for CAP reforms covering the period from 2013 to 2020 and beyond.

There are many opposing and conflicting views on what form any future CAP deal should take and the budget that should be allocated to it.

Attempting to predict the outcome of these negotiations and investing money on the back of that prediction is a very dangerous game.

As one well-known farm consultant put it: "People who are spending hard-earned cash on the basis of the 2010-2012 rumour are crystal ball gazing."

With more than €1,800 freely being paid for suckler cows with calves at foot in marts last week, the money involved is significant.

It's fair enough if farmers believe they will get a return on the money spent on stock lately.

But they could be left nursing heavy losses if they are gambling on the basis of rumours about future EU policy decisions.

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