Farm Ireland
Independent.ie

Wednesday 7 December 2016

Price guarantees the only way to get finishers on side

Joe Healy

Published 14/09/2010 | 05:00

Sun Tzu was a famous Chinese military strategist who in his book, The Art of War, said that all warfare was based upon deception and to achieve victory you must, first, win the war and then fight the war.

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I remember this doing the rounds in my head last December when the QPS was first introduced and hoping that this would not be a modern-day example of the war being won before the battle began.

Unfortunately, nothing has happened since to allay any of the fears I had at the time of the factories introducing a scheme that would ultimately be to their own benefit. As soon as it was agreed upon, the processors had the war won before there was even an animal killed.

It now looks likely, however, that it may be about to backfire as factory sources are quite open about their fears of cattle supplies drying up in the November-December period. While they will point to other reasons, I have spoken to more than a few finishers who are adamant that they are not going to risk any of their animals being penalised for being over fat as well as the costs associated with carrying cattle for the next two months with absolutely no guarantee on the price coming from the factories.

Money

Beef finishers lost huge amounts of money finishing cattle last autumn and they just cannot afford to take a chance on it again this year. The message for the processors is pretty clear: if they want to be sure of a supply later on then the farmer needs a forward contract or some sort of a guaranteed price.

With last week's kill up at 34,500hd, the total kill for the year to date is almost 100,000 animals ahead of last year's figure. This is roughly equivalent to three weeks of slaughtering, and estimated figures suggest that the weekly kill for the rest of the year will be down an average of 3,000hd/week.

Anyway, in relation to base quotes at the moment, most of the plants are working off a base of 295-298c/kg for the steers and 300-305c/kg for the heifers. Factories within this range include Kepak, Dawn and AIBP plants, along with Slaney, Kildare, Dunbia, Liffey and Moyvalley.

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Tops for the heifers is Kepak Athleague, while Moyvalley appears to be the better payers for the steers. Donegal, even though they are full for the week, has continued to pay 322c/kg for the in-spec R grades and 330c/kg for the Us, with the out-of-spec animals making 11c/kg less. Reports suggest that a plant in the south-east paid 311c/kg for good R-grade heifers late last week.

For the young R and U grade bulls that plant is paying 311c/kg and 319c/kg respectively. Plants elsewhere are quoting a range of 280-286c/kg for the O grades, 294-302c/kg for the Rs and 302-314c/kg for the Us.

In an angry response to the downward pressure on prices, IFA's Michael Doran said that, with Britain and EU prices strong, there is no basis for the price drops being inflicted by the plants here. Cull cow quotes range from 228c/kg up to 269c/kg, with reports of up to 274c/kg being paid.

Irish Independent