Farm Ireland
Independent.ie

Wednesday 12 December 2018

Production cuts needed to get beef prices back on track - ICSA

Herd of Blue-gray crossbred steers. White Shorthorn X Galloway.
Herd of Blue-gray crossbred steers. White Shorthorn X Galloway.
Declan O'Brien

Declan O'Brien

Significant cuts in domestic beef production to get supply and demand back into equilibrium is the only solution to the current cattle-price crisis, the ICSA has claimed.

The drystock farmers' body maintained that live shipping had to be ramped up to take out tens of thousands of calves that cannot be profitably finished.

ICSA also insisted that all calves from the dairy herd with any Jersey influence whatsoever must be declared part-Jersey at the point of sale so that farmers are "not duped into buying" the stock.

In a broadside on current farm policy, ICSA maintained that Food Wise 2025 had "failed disastrously" to take account of the unintended consequences of dairy expansion on the beef sector, and was undermining Ireland's position as a major beef exporter.

"The reality is staring us in the face, which is that we do not have sufficient outlets for a weekly kill of 40,000 head. It is futile demanding a price equating to cost of production plus a margin when our weekly kill is just too high," said ICSA beef chairman Edmund Graham.

"In December 2017, I got €4.10/kg flat for bulls under 24 months. Now the price is €3.80/kg for U grades and €3.70/kg for Rs, or an average of €3.75/kg. On a 400kg carcass, that equates to €140/hd," he pointed out.

"In addition, I estimate increased feed costs due to drought at €50/hd. Thus the bull beef system is €190/hd worse off. Even in good times, this is a low margin system and a downturn of €190/animal cannot be carried for long."

The ICSA representative asked if the cost of dairy expansion was "too high for the beef sector", with 400,000 additional calves born, as well as extra cull cows.

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Echoing concerns expressed by Pearse Kelly of Teagasc, Mr Graham said the increasing Jersey and Kiwi influence in the dairy herd was making many of the calves totally unviable for the beef farmer.

"Whereas the use of purebred Jersey bulls is very much a minority thing, there is Jersey influence in many bulls that are nominally Friesian. Feedlots estimate that these calves are worth minus €165 when all the sums are done. Even where traditional beef-breed bulls are crossed with these [dairy cows], the calves are really unsatisfactory for profitable finishing," Mr Graham maintained.

"Dairy farmers can't be blamed for following the money when it comes to milk solids, but we need a complete rethink at national level.

"Is it wise to ignore the reality that the current dairy expansion strategy based on the New Zealand model is not compatible with wanting to also be a leading exporter of beef," he asked.

"To get to the stage where we can get a price that leaves farmers with a fair margin, we first have to tackle the chaotic oversupply of cattle. Obviously a key requirement will be to build a much bigger trade in live exports but this is easier said than done," Mr Graham said.

A recent Commission analysis of the EU beef market, highlighting that total EU production for 2018 is up 2pc as a result of this summer's drought, with heifer output up 7.7pc and cows up 3.9pc.

Angus Woods of IFA said the prospects and forecast for 2019 were more positive, with reduced production and a more stable market and price environment.

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