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Wednesday 16 January 2019

Cormac Healy: Processors have delivered on measures to boost returns to suckler farmers

The increasing international focus on sustainably produced beef is a big opportunity for suckler farmers

Describing the suckler beef herd as the cornerstone of the Irish beef sector is not just a tagline
Describing the suckler beef herd as the cornerstone of the Irish beef sector is not just a tagline

Cormac Healy

Irish beef is listed with more retailers than beef from any other country in the world. Over the last decade or so, huge efforts have been made to increase the penetration of Irish beef with key customer accounts across the UK, Europe and beyond.

The strategy has been to increase the proportion of Irish beef sales going to retail and major food-service operators, improving the profile of the customer base and increasing the return from the marketplace.

Beef from the specialised suckler herd has been a significant factor in achieving this progress. The overall quality of beef from the suckler herd and the story of grass-fed specialised beef production from family farms are important aspects in positioning Irish beef with key buyers.

Describing the suckler beef herd as the cornerstone of the Irish beef sector is not just a tagline.

Our ability to retain key customer accounts or push further for the premiumisation of Irish beef would be challenged if we were to see a major decline in suckler herd in Ireland.

Furthermore, the suckler enterprise operates throughout Ireland, often on land types that would not easily lend themselves to other farm enterprises.

The improved marketing and the higher customer profile for Irish beef exports has delivered a price dividend. Through farmers' eyes that price dividend may not be enough, but, over the last decade, the fact is that Irish cattle price as a percentage of EU average price has moved from 95pc to 100pc and in more recent times to a sustained position well above the EU average.

Year-to-date in 2018, Irish cattle price has been 106pc of the EU average. It must be remembered that this has been achieved in the context of Ireland having to export 90pc of the beef we produce compared to most EU members states where the domestic market consumes all or the majority of their beef.

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In addition to a general improvement in price, efforts have also been made by the processing industry to improve the returns to suckler beef producers.

QPS

The QPS was introduced to improve market signalling and deliver greater price differentiation in favour of the better grading animals from the suckler herd. The QPS was a significant step forward in the beef sector and has existed relatively unchanged for almost a decade now.

Producer calls have been made for the price differentials between grades to be increased. Given the pressure in suckler beef production and the changing structure of the national herd, perhaps there is need to heed the calls.

But price is not the full story, it never is. Margin in any enterprise is about price, costs and productivity. Progress has been made in more recent years on productivity in suckler enterprises through the Beef Data & Genomics Programme (BDGP).

It is reported that since 2014, calving interval has reduced from 407 to 393 days, calves per cow per year has improved from 0.80 to 0.87 and the percentage of suckler replacements calving at two years has increased from 17pc to 26pc.

The BDGP has been a very positive measure for the sector not only in delivering targeted financial support to the sector but also, critically, delivering support through a programme that improves the performance and productivity of enterprises. The BDGP needs to be maintained into the future and its coverage increased.

The announcement of a new Beef Environmental Efficiency Programme in the recent Budget is also to be welcomed. Hopefully investment in this new measure will be increased in the years ahead.

The BDGP and the new BEEP initiative are important in delivering support to the specialised suckler beef sector which is the catalyst of significant wider economic activity and job creation in rural Ireland.

These programmes are also critical in driving improved economic and environmental performance. Tackling the environmental footprint of beef enterprises is a major but unavoidable challenge for our sector.

Whether through legislation, taxation or international commitments, pressure to reduce our GHG emissions is intensifying and in the marketplace, there is increasing focus on sourcing sustainably produced beef.

Irish suckler beef needs to win in this space.

Cormac Healy is senior director of Meat Industry Ireland

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