Farm Ireland

Thursday 26 April 2018

Now might be the time to take a punt on plainer stores as demand lifts

John Shirley

Beef prices across the world are shooting up. But will Irish farmers get the benefit? Compared to 12 months ago, Bord Bia has reported global price increases.

The price hikes have taken hold in all the main beef exporting nations. The list below tells its own story:

  • Up 12.5pc in the US from 224c/kg to 252c/kg;
  • Up 13pc in Uruguay from 155c/kg to 175c/kg;
  • Up 26pc in Brazil from 167c/kg to 210c/kg;
  • Up 53pc in Argentina from 133c/kg to 204c/kg.

These are the prices for slaughter cattle. But the slaughter cattle price impact in these countries has fed back along the production chain to feeder and store cattle as well.

All of these beef prices are still well below the levels that Irish farmers need, and aspire to, for top quality beef. Yet, for the coming months, the pressure on price will be upwards. The biggest constraint on any EU beef price rise is still the general recession and the power of the multiples.

However, in times of an absolute scarcity, it is at the lower end that the greatest effect on price is seen. When beef prices are rising, the cow price is first to jump. All sheepmeat prices rose this spring, but it was the cull ewe that caught the biggest relative lift.

On this basis I'd argue the world rise in beef prices is most likely to benefit the demand for the plainer cattle and the cow beef in Ireland. Historically, Ireland shipped plainer cattle to North Africa and the Middle East. In the recent past, these regions have bought their cattle from South America. Ireland was excluded partly because of BSE, but thankfully that ban has been lifted. But with the jump in South American prices, cattle in Ireland and the EU can now compete across North Africa, even in the absence of export refunds. Indeed, France shipped about 40,000 live cattle to North Africa last year -- mostly to Algeria.

In the past, Ireland shipped cattle to Egypt, Libya, Lebanon, Tunisia, Algeria and Morocco. Most of the cattle that travelled were Friesians and Holsteins.

Very strong enquiries are again coming from these customers. What we now need is sensible and fair veterinary inspection of the boats in which the cattle can be shipped. I understand that enquiries to approve some boats are being submitted to the Department of Agriculture.

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If new contracts are secured, will Ireland have the cattle to supply them? Since the previous peak of live shipping, a major trade in veal calves has evolved. In the first three months of this year, calf exports were up 45pc to almost 80,000hd. In addition, a few thousand more have been slaughtered at home as baby calves.

Many of the calves being exported or live shipped would suit a North African trade if it got going again. We were very glad to have the veal outlet to take the plain calves from the dairy herd, and this demand will continue. But is there scope to grow these calves further? Can we, at least, cheaply grow some of the Holstein and Friesian calves to 300kg plus?

Trials at Teagasc Grange have shown that, in their first season at grass, the Jersey cross Holstein calves were 20kg liveweight lighter than full Holsteins at the 10-month stage. I'm not advocating that we should breed Jersey cattle for beef but, if they are out there, they are a resource, so let's make the best of them. It is worth remembering that Jersey-cross bull calves are currently making about €5/hd.

I understand, too, that the North African markets would take the lower-quality cattle from the suckler herd. Again, I would prefer to see suckler farmers going for the top quality. It costs no more to breed a good one as a bad one and so on. But an extra export demand for the tail-end sucklers would be highly desirable.

Last year the Irish suckler herd shrunk by 5pc. Another 5pc of the cows are likely to disappear this year. In the past decade, the sheep flock has almost halved. We are rapidly running down the wealth-creating potential of Irish farming. I know that times are not easy, but let us hold onto the productive parts of farming.

Maybe it is a situation of the darkest hour being before the dawn. The new price grid has hit the price of plain cattle. A live shipping trade could redress the balance a little. Maybe now is the time for store buyers to take a punt on the dairy calf or the plainer store.

Irish Independent