Farm Ireland

Sunday 19 November 2017

Viewpoint: Rocky road ahead for beef sector

Teagasc economist Kevin Hanrahan
Teagasc economist Kevin Hanrahan
Louise Hogan

Louise Hogan

The forecast for the months' ahead is for a turbulent ride, when it comes to beef prices at least.

As we waited for the annual review and outlook of Teagasc to get underway in Dublin's RDS this week the discussion turned to the viability of the beef sector.

Back in the 1980s there was an old ACOT video doing the rounds that aptly labelled finishers - 'The Gambler'.

There were a few murmurs that maybe it should be resurrected for new students considered entering the finishing fray as we fast-forward 30 years and little had changed.

It was a buoyant 2015 for cattle with finishing enterprises up 33pc and suckler gross margins up 37pc on average, yet we shouldn't forget that it was on the back of a dismal 2014.

This year saw weanlings and store cattle surge as heated sales were reported ringside, while finished cattle were up 9pc. Yet for next year Teagasc economists are forcasting a return to 'normality', as Kevin Hanrahan reports a not-so-positive outlook.

The warnings come on the back of an expected growth in supplies of cattle in the EU and Ireland, with the expansion of the EU dairy herd.

A further depreciation of the euro may save Irish exports and prices but pinning hopes on that 'gamble' offers little comfort to those looking at where prices will be at next year.

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The ill wind blowing over next year's prices comes as news emerged of a major shift in the processing sector.

ABP Group confirmed it is to take a 50pc stake in Slaney Foods - a move that sees it consolidate its share of the beef processing trade, but also sees it enter the sheepmeat market.

The new 50:50 partnership between ABP and Northern Ireland's Linden Foods will first have to run the gauntlet of the Competition and Consumer Protection Commission.

Yet ABP points out it will be business as usual on all sites operated by Slaney which currently accounts for 6pc of cattle processing, with ICM commanding 40pc of the sheep kill.

This means ABP's slice of the Irish beef trade will climb from 22pc to 28pc. Any potential concentration of the beef kill is something that should concern all farmers.

Already farmers have reported a number of plants are currently making it difficult for finishers to get cattle over 420kg carcase weight killed.

The goalposts seem to keep moving, yet farmers have always shown they will adapt to change if they know it will be definite.

Finishers don't know what they are aiming for at the moment, as they may sell this month at 415kg yet see a neighbour sell at heavier weights in January with no penalties if the supplies are tight.

Now is the time when powerful farm bodies of all shapes and sizes are needed to ensure the Beef Forum sends out very clear signals.

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