Farm Ireland

Sunday 24 February 2019

Factories can pick and choose from abundance of bulls


After the blizzards, the deluges and the drought of 2018, how bad might Brexit be by comparison?
After the blizzards, the deluges and the drought of 2018, how bad might Brexit be by comparison?
Farmers at the ring at Headford mart cattle and sheep sale. Photo: Ray Ryan.
Martin Coughlan

Martin Coughlan

While this is a new year, base prices for bullocks and heifers have remained exactly as they were in my last report before Christmas, ie €3.75/kg for steers with heifers 10c/kg better at €3.85/kg.

On the bull side, the story is at best the same as it was before the break, with under 24-month U grade bulls selling for €3.80/kg, Rs making €3.70/kg, while O grades are around the €3.50/kg mark. That's the good news. The bad news is that there appears to be, from what I'm hearing, an awful lot of bulls in the system at present, resulting in the factories being able to pick and choose their customers.

Those suffering the most appear to be the men with Friesian types, with many reports circulating of factories unwilling to take the numbers they are being offered. Those that do find a new home, seem to be doing so at a flat price of €3.50/kg.

The story among those with cull cows to sell is that prices for Rs continue to hover around the €3.00/kg mark, with maybe a shake more going on occasion. O grades are at €2.70-2.80/kg, while your better P grade is in the €2.50-2.60/kg price range, depending on cover. After that, it's a lottery but it can also depend on how good your agent is.

There does come a point, however, when I believe the factory prices of very poor cull cows are calculated not so much on what their meat actually might be worth but on what their hides and offal will make. I know of Jersey cows sold to a factory recently on the basis that the farmer told the lorry driver agent: "Get what you can for them." The eventual price varied from €1.50-1.60/kg.

I don't have a problem with the price, what bothers me is that animals who in their entirety could end up going into cat and dog food because they are not really worth boning out are taking up space on a kill line at a time when those with prime beef can't get in the door.

What of the future? What might 2019 bring? After the blizzards, the deluges and the drought of 2018, how bad might Brexit be by comparison? Some experts and politicians have painted a picture of a total trade shutdown as the British system wrestles with the logistics of implementing WTO tariffs.

Both the Kaiser and Hitler tried to starve the British people, so are we saying that where both of these warlords failed, the Conservative Party may succeed?

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In an attempt to understand the possible outcomes for the Irish beef trade of various Brexit scenarios, I spoke over the New Year with cattle farmers, factory agents and senior processing staff about Brexit.

To be honest, no one knows how Brexit will pan out but all agree that a no-deal scenario will be a mess - if only because implementing complex WTO tariff arrangements at short notice would be a real challenge for the British authorities.

In the final analysis, however, I'm inclined to go with one senior factory official's assessment: "From a business perspective, you can only deal with the situation according to what cards are dealt and so far we have no idea how those cards might fall."

A farming colleague put it differently, but the point was the same: "Forecasting Brexit is like trying to predict the weather three months in advance, it can't be done."

The question that must be asked is whether the processing sector has contracts in place with its British supermarket customers post-March 19, the date on which the UK is supposed to finally and officially withdraw from the EU.

While I am led to believe that they have, I maintain that the industry owes it to their farmer suppliers to clarify this point 100pc.

In relation to the current situation as regards pricing and supply, industry sources, while acknowledging the difficulties being experienced by those with young bulls, were at pains to point out that January is traditionally a tough month as households adjust back to their spending post-Christmas.

They also pointed out that returns from the British high street for Christmas 2018 were below those of 2017 as British shoppers adopted a more cautious approach to their finances with possibly one eye on March 19.

That slowdown in retail spending may help explain why some factories have reduced killing days and/or numbers.

However, I got the feeling from speaking to those at the coalface that while some factories may be reducing their kills as they possibly concentrate on trying to reduce their cold store tonnage, others are waiting to see exactly how the first couple of weeks pan out as regards supplies.

The question needing answering going forward is whether lots of bulls this year meant less bullocks?

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