John Heney: Reeling in the years of beef price volatility
We have been hearing a lot about beef farming recently and most non-farming people find it very difficult to understand what's happening.
Even back in my school days I can remember concerns I expressed about low incomes in cattle farming being quickly dismissed by my mother. It appeared that I, like many other farmers' sons, were destined to take over the family farm - and that was it.
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After completing secondary school I returned to help my father, who was quite elderly at this time.
I remember him talking about when he started farming, of building up a nice herd of cattle when disease struck, wiping out most of his stock. Determined not to be defeated and anxious to get back up and going again and with cash in short supply, he decided to buy in planer stock.
Realising that there was more profit in fattening these plain cattle he decided to stick with them. Is it any surprise that many years later I still find myself fattening plain Friesian cattle?
One of my longest farming memories is seeing my father selling beef cattle in the late sixties for £6 per cwt, this translates in Euros to about €7.50 per 50kg.
I also remember my father being a vociferous opponent of the ill-fated Cork Marts buy-out of IMP, saying that monopolies were a very bad thing. Interestingly, this is an issue which is extremely topical at the moment.
After joining the EU and the initial 1974 price glitch, there was an almost constant rise in cattle prices for the next ten years. The biggest challenge for me was trying to retain enough capital to run my business as the farmer confidence which these rises generated, resulted in store prices rising far quicker than the price we got for beef.
My earlier decades in the beef business also saw me increase my cattle numbers as I followed the advice of our advisory services. However, after a number of years I began to realise that the cost of carrying all these extra cattle did not really cover the extra fertiliser costs.
I decided to change and with good grass management and the benefit of getting cattle off the land over winter I found that my stocking rate remained quite good using no fertiliser for grazing. I also found that on average, feeding expensive meals to finish cattle on grass was not really necessary.
These were the best decisions I have ever made and now with correct grass management I have no problem finishing my cattle on old pasture grass alone, so much so that some will occasionally grade over fat.
After gaining entry to the EU, beef prices and the introduction of beef supports were probably the stand-out issues which affected all beef farmers.
Prices peaked at £1.20 per lb at the end of 1988, apparently as a result of a turf war between two major players in the industry. This was equal to about €3.36 per kg, but we must remember that there was no "Basic Payment Scheme" money paid to farmers back then.
With the introduction of the McSharry reform, the price support which the factories received were changed to payments paid directly to farmers. The fact that these payments were only paid on male animals irrespective of whether they were beef or dairy breed resulted in a truly crazy situation developing.
This capitalisation of the support payments on male calf irrespective of breed quickly led to the development of fattening units on many of our larger dairy farms.
Is it any wonder that several high profile reports at the time predicted that beef farming would soon become extinct and simply exist as just another enterprise on larger dairy farms.
Agenda 2,000 was a lifeline for beef farming in Ireland with it's decoupled payments system. For the first time most EU supports were focused directly on beef farming.
These payments combined with a general rise in beef prices led to a short-lived recovery in beef farming in the first decade of this century.
Unfortunately the restructuring of reducing beef support payments to a "Basic Payment Scheme" means that it is now spread across most other sectors of farming. This has resulted in further reducing and diluting support payments to beef producers.
These reductions, when combined with a global collapse in the beef market, has led to the current predicament for beef farmers and as a result much of rural Ireland now finds itself under extreme pressure.
In summary, speaking as a person who has always been totally dependent on beef farming for household income, all I can say is that I just about survived.
Unfortunately, the future under current Government and EU policy looks very bleak indeed for any young person considering a career in beef farming. The whole beef sector eagerly awaits our Government's response to the current crisis.
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