Beef demand set to remain strong into first quarter of 2018

John Leech, Teagasc shows Lucia Lozano, Loreto College, Fermoy how to extract DNA from a banana during Science Week in Teagasc Moorepark Research Centre, Fermoy, Co Cork. Photo O'Gorman Photography.

Martin Ryan

The weekly cattle kill hit a nine-year high recently when factory throughput in the five days to Friday, November 10 exceeded 38,500 animals.

This is the highest weekly kill since late October 2008, when export plants slaughtered 40,675 cattle. The highest weekly kill recorded was in March 2001 when 50,775 animals were processed.

The total kill so far this year has reached 1.5m animals. This is close to the average annual intake of 1.56m over the past nine years - and there are still seven weeks to run to the end of 2017.

However, beef finishers and industry sources report continued strong demand for stock despite the increased kill, with some factories struggling this week to get sufficient numbers for pre-Christmas contracts.

Bord Bia beef specialist Joe Burke attributed the 81,665hd increase in cattle supplies this year compared to 2016 to a combination of bigger numbers from the dairy herd and the sharp drop in calf exports during 2015 and 2016.

He predicted that supplies will continue strong for the remaining weeks of 2017 and into the early months of 2018, before the impact of the surge in calf exports this year filters in to bring about an easing in stock numbers.

Mr Burke pointed out that factory demand had remained strong through the autumn, with the average R3 steer price for the year to date 5-6 cent/kg higher than 2016.

However, he noted that the increased factory throughput had not delivered an equivalent lift in beef supplies. This was due to the increased number of cattle coming from the dairy herd, which has resulted in a sizeable drop in the average carcass weight, said Mr Burke.

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In addition, there were 80,000 extra Angus and Hereford calves registered in 2015, with the combination of Angus and Hereford coming into the production system increasing by one third over the past five years.

The popularity of both breeds has been aided by the incentive offered to finishers by the factories who are paying a premium of 10-20c/kg for in-spec Angus and Hereford.

ABP bosses have described the marketing of Hereford beef on the export markets as akin to "pushing an open door" compared to Friesian. The company is also contracting specialist producers to deliver increased supplies of Angus.

When asked to quantify the growth potential for Hereford/Angus beef on the export markets, ABP Food Group chief operating officer Finbarr McDonnell said: "I don't know because we don't have the product to supply the demand."

Nonetheless, while the processors have denied rumours of a possible withdrawal or a reduction in the premium currently being paid on Hereford and Angus cattle, there is some unease among breeders that the explosion in crosses from the dairy herd could saturate the market requirement.

These fears mirror wider concerns in the beef sector regarding the impact of falling suckler cow numbers and a growing anxiety that the beef industry is inevitably becoming a by-product of the dairy sector.

These concerns were given credence by recent findings which highlighted a significant deterioration in animal grading at the factories. A sharp increase in O and P grade animals was recorded. In fact, for the third quarter of 2017, almost two out of every three steers slaughtered at export plants failed to make base grades.

ICMSA beef chairman, Michael Guinan, said the "very significant" rise in the number of lower-grade animals was of concern to all finishers. "While the increased number of cattle from the dairy herd may be a contributing factor, it certainly cannot explain this kind of dramatic change and farmers are justifiably concerned by the apparent trend in grading with more and more demands being heard for far greater transparency in the grading system," Mr Guinan said.

"The drop in grades cannot be explained simply in terms of the increased dairy influence. There is also disquiet around the accuracy of grading machines themselves," he claimed.

Indo Farming

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