Tuesday 27 September 2016

Turkish delight or another dead end for the beef sector?

Is the much vaunted Turkish trade going to happen? If so, when and, more importantly, what will it pay? Chris McCullough investigates

Published 29/06/2016 | 02:30

Mehmet Dogan runs Titar Dairy Farm where, along with 50 staff milk, he milks 1,000 Holstein cows. There is an additional 2,000 head of dry cows, heifer replacements and bull beef.
Mehmet Dogan runs Titar Dairy Farm where, along with 50 staff milk, he milks 1,000 Holstein cows. There is an additional 2,000 head of dry cows, heifer replacements and bull beef.

Last year, Turkey imported close to 380,000 cattle, with a massive 120,000 from France alone.

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With France out of the equation due to disease restrictions, and the Irish authorities securing export permits in the last fortnight, farmers' hopes have zeroed in on this premium market where a protectionist regime has ensured that the going local rate for finished cattle is anything up to €8/kg.

"Turkey is very patriotic when it comes to their food so it is quite an achievement to be able to send cattle there," said Bord Bia's beef specialist, Joe Burke.

However, since the green light was issued, exporters here have been doing their best to play down expectations, claiming that market realities would prevent them from paying any more than €2/kg.

Most Irish farmers will scoff at the notion of giving away light stock at these prices, when the going rate at home is €2.70-3.00/kg.

But it appears that exporters may not be plucking the figure from the sky. Here's some of the facts.

Turkey has set an import quota of 400,000hd, beyond which a punitive 60pc import tax will be levied on stock.

However, this level allows the Irish plenty of scope to get stock into Turkey inside the quota, but it should be noted that a new 15pc import levy will apply to all stock within the quota from July 1.

If we take €3/kg as a starting point for the 300kg animal in the mart, the animal starts off the journey costing €900.

According to Mr Burke, another €150/hd will be required to cover the medication and upkeep of the animal for the subsequent month.

"This would be the best-case scenario. The quarantine takes 21 days for a start, but there are plenty of potential banana skins that could delay the process further," he said.

"The animals will have to be vaccinated, and tested for IBR and BVD. Any that fail that will be a loss for the job. And this unsettled period will often see animals struggle to put on any weight.

"But it's also essential to get the cattle acclimatised for Turkey. Cattle coming from grass need time to get them used to Turkey's fattening system.

"They must be well weaned, not coming straight off a cow and they should be used to concentrates.

"There's also the transport to Turkey will probably add another €250/hd," said Mr Burke.

That brings the cost of the animal, which is still hovering around the 300kg weight, to €1,300, or €4.20-4.30/kg. Add in a 15pc levy tax, it brings the total to €4.80-5.00/kg, and this is before the live exporter's margin has been taken into account.

One Turkish feedlot owner that is interested in sourcing Irish stock says that he hopes to pay significantly less than this - closer to €3.35/kg.

Mehmet Dogan runs Titar Dairy Farm where, along with 50 staff milk, he milks 1,000 Holstein cows. There is an additional 2,000 head of dry cows, heifer replacements and bull beef.

His farm is located in the Izmir region, on the west coast of Turkey, with easy access to ports along the Aegean Sea.

With the backing of investors, Mehmet has big ambitions for the farm, with plans to establish a slaughterhouse and facilities to kill and process 20,000 head of beef per year.

Currently the focus is on cattle from South America and Australia, but Ireland is now on his radar too.

"Our dairy farm is running well but I have ambitions to start a beef cattle unit here with our own slaughterhouse.

"The Turkish government supports us well and is keen to see development in the farming sector.

"My target is to kill 20,000 head of beef cattle per year importing the majority of them from Uruguay and Australia.

"But I am also interested in bringing in cattle from Ireland if the conditions are right.

"We would be keen in bringing in lighter animals around 220-270kg and fatten them for slaughter.

"Cattle from the Irish grass-based feeding system would be of excellent quality and that is something we are looking for.

"However, the cattle must be approved for export with all the appropriate health certificates in place.

"We also want cattle that are weaned and used to eating concentrates and hay or other roughages.

"We receive around €75 per head per year from the government as a health subsidy for killing our bull beef at 15 months of age," he added.

"Our estimated costs for the imported cattle include shipment, customs duties and charges, nutrition, veterinary services and insurance costs in Turkey.

"With all these costs factored in we are hoping to pay around US$3.80/kg for imported animals, which is around €3.34/kg."

With lighter stock freely making €3/kg on the domestic market, only a major price downturn will convince farmers here to part with animals for less. So despite the hype, a major gap between Irish and Turkish expectations remains. Whether it will be bridged remains to be seen.

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