Falling prices and poor relationships hurt Irish beef industry
Declining beef prices have already cost Irish farmers €106 million (US$144.1m) this year so far, Irish Cattle and Sheep Farmers’ Association (ICSA) general secretary Eddie Punch told GlobalMeatNews.
The general consensus is that "the beef industry will run into difficulties in the coming years", Punch said. His association has more than 10,000 members. Indeed, a recent National Farm Survey from Teagasc, Ireland’s Agriculture and Food Development Authority, show that "dairy farming was almost five times more profitable per acre than suckling or beef in 2013", he said.
But Ireland’s meat processing industry does not agree that there is a structural problem: "While prices have been under pressure this year, this fall comes after five years of successive price increases, which have seen a producer price increase of 40%," Meat Industry Ireland director Joe Ryan said. Indeed, "Irish beef exports value increased by a further 10% in 2013 to reach a record €2.1bn," he noted.
Ryan said the current market difficulties were "demand-driven" because beef consumption across the EU has fallen by 500,000 tonnes, the equivalent of two million cattle, throughout the recent recession and its aftermath. This decline in consumption and a related production fall continued during 2012 and 2013, despite the slow recovery experienced in these years.
However, EU beef production is projected to increase this year, hitting prices. "Ireland exports 95% of the beef into these European markets – which has made it more difficult to market our beef and has resulted in a falling beef price," he said.
A major bone of contention between beef farmers and processors is the latter’s demand that all bulls must be under 16 months and 420kg carcase weight. "The reality is that heavy Continental weanlings cannot be finished economically at that age given the cost of feed inputs on Irish farms," said Punch, adding that there were proposals to reduce the maximum weight further to 380kg.
"This has resulted in a huge crisis of confidence, especially among beef finishers who specialise in feeding top-quality bull beef animals and also among suckler producers who supply them," he said. "The suckler farmers have spent years improving the genetic merit of their herds, focusing on Continental breeds such as Charolais, and are not keen to throw all that away."
That said, Ryan argued this trend was hardly unexpected: "Over a number of years meat processors have communicated with farmers through their representative bodies, directly giving clear guidelines that the market demand was for 16-month bull beef."
Moreover, he said there were many producers profitably achieving these marketplace specifications. "As over 95% of Irish beef is exported, the specifications demanded by the marketplace are extremely important. The industry has also continuously stressed that grass-fed steer and heifer beef is the unique selling point for Irish beef, particularly on Continental EU markets," he said.
He argued his claims have been backed by the ‘Dowling Report’, commissioned by the government’s Department of Agriculture, Food and the Marine, which said processor specifications reflected consumer demand. Instead, he urged farmers to implement Dowling Report recommendations on animal breeding, on-farm production efficiencies and animal health programmes, which will "add significantly to farmers’ margins".
Meanwhile on Friday 4 July, Irish minister for agriculture, food and the marine Simon Coveney urged beef farmers and processors to create a relationship "built on transparency and trust". The minister said restoring confidence was important when prices fall: "Irish beef farmers are feeling the pressure at the moment. Prices have declined significantly since the highs of last year, not only in Ireland, but internationally. This is a market reality," he said, adding retailers should "ensure that farmers receive a fair return for their efforts if the sector is to be sustainable".
