Farm Ireland
Independent.ie

Monday 18 December 2017

Libyan export trade opens up opportunities for bull calves

The remaining BSE- inspired shackles on the Irish cattle trade are being removed. Allah be praised. Libya's acceptance of Ireland's health certification on live cattle imports is another major step towards the norm enjoyed pre-BSE.

The timing of a re-opening of the live markets in North Africa for Irish cattle is fortuitous. It is happening as our country embarks on a major expansion in the dairy herd.

Before the BSE live cattle lock-out in 1995, the North African and Middle Eastern market for Irish cattle and beef was huge.

In 1993, close to 400,000 head were shipped live and more than 200,000 tonnes went as carcass beef. At that stage the live shipping put a real buzz into the trade.

Since then, Irish meat plants have managed to secure markets within the EU for the great bulk of our beef. Irish beef is now on the shelves of over 70 EU-based supermarket chains ,according to Bord Bia.

Opportunistic short term markets should not put this long term high quality business at risk. But North Africa and the Middle East is one of the world's major deficit areas for beef.

They are, and will be, long term customers for beef and cattle. These oil rich countries also have the cash to pay for product.

There is opportunity here, too, for long term business for Ireland, in live exports which would complement our EU beef business.

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Last time round the trade to Middle East/North Africa was dependent on massive EU export refunds.

At one stage the export refund made up 75pc of the price being paid to the farmer. And these refunds were paid on a flat rate irrespective of the quality of the animal.

NIGHTMARE

Indeed the administration of the refund regime was a nightmare for the Department of Agriculture, which ultimately led to the infamous Beef Tribunal of the early 1990s.

This situation has changed utterly. The surge in world cattle prices has enabled EU exports to North Africa/Middle East to take place without need for refund or subsidy.

Turkey now has some of the highest beef prices in the world and is a major factor in supporting the cattle prices on continental Europe.

There is also a switch to democracy in countries like Libya, Egypt and Tunisia and such fledgling democracies need international co-operation and support.

I understand that the customers in Libya are looking for store-type male animals over 400kg and under two years of age. They will also have a preference for bulls over steers.

Holstein, Friesan, Angus and Hereford cross bull calves from the dairy herd would suit this trade, provided they have some covering of flesh.

The sort of calves that currently go for veal within Europe should be ideal. It is expected that the Libyan market can return prices similar to current mart levels.

If long term trade can be secured for young dairy type bulls with customers in Libya, this would be an opportunity for the smaller drystock farmers.

Such a farmer could never make a living from fattening big cattle. He/she could work dairy calves into young bull beef in a contract arrangement with a meat plant. Indeed some of this is already happening.

However the specification for the live trade with Libya would likely be less critical as these cattle would be heading for finishing in a feedlot in North Africa.

There are lots of Irish farmers with empty sheds and slatted houses who have the skills to rear good-sized batches of calves.

If necessary, such a farmer could apply for derogation under the Nitrates Directive to carry sufficient calves to deliver a profit akin to the average industrial wage. There are tillage farmers, too, who could do with the organic matter from a beef enterprise.

The only real money I ever made from beef farming was in the 1980s, when I bought 40 Friesan bull calves one November averaging less than £20/hd. These were kept thriving on grass, rape, silage and meals, until about 15 months of age, when the whole group was sold in a single batch to a live shipper. In old money, they averaged about nine hundredweight (450kg) and came into £560/hd (€710).

ATTRACTION

Hopefully the increased supply of bull calves from an expanding dairy herd will bring more attractive calf prices for the rearers.

Ideally rearers would prefer autumn or very early spring born bulls with no Jersey breeding. Such young bulls can make best use of spring and summer grass.

Getting maximum gain off well managed grass will be the key to turning profit from these animals, whether they end up in a meat plant or with a live shipper.

To get a 40kg dairy calf to 450kg at 18 months of age demands an average gain of 0.75kg/day. To hit 450kg at 15 months demands a gain of 0.9kg/day.

Assuming a modest calf price of €100 and €500 to cover rearing and feeding etc, that gives a breakeven of €600/hd. At a selling price of, say €2/kg, a 450kg bull would gross €900. I know that these are back-of-the-envelope sums but the project looks feasible.

But the business is not yet up and going. I understand that the Libyan health spec includes cattle which have been vaccinated against IBR at least seven days pre-shipping and also that the cattle have been treated for internal parasites such as worms and fluke.

The next challenge is to secure Department of Agriculture approval on boats to ship cattle to Libya. Presumably potential traders are already working on the finance and other logistics that will make the trade happen.

Indo Farming