Caution urged as beef farmers pressed to expand output by 40%

BEEF farmers should exercise caution before responding to calls to expand their output by 40% without any evidence of sustainable prices, the Irish Cattle and Sheep Association (ICSA) warned.

ICSA general secretary Eddie Punch said he welcomes industry suggestions that there are beef sales growth opportunities in Germany and China, but expressed alarm at the Beef Activation Group “gung-ho talk” of expanding beef output by 40% by 2020.

Mr Punch said: “I can’t believe that they said that what we need now is a coupled payment. That will be a repeat of old mistakes of the past. The good prices that we have been getting for beef and lamb in 2011 couldn’t come about with old style coupled payments. We cannot fall back into the same trap of thinking that we can go back to coupled payments to artificially boost supply while taking our eye off the ball for the need for demand-driven price increases. There are only three things that drive up price: scarcity, scarcity and more scarcity.”

The ICSA director was responding to the unveiling of a plan for beef expansion for the Beef Activation Group, a committee created as part of the Government’s expansion report, Food Harvest 2020.

The group’s original 20% goal for beef output expansion was revised to 40% on the basis of greater breeding methods, a new marketing plan and greater efficiencies earmarked for the sector.

Agriculture Minister Simon Coveney and senior representatives of Teagasc, Bord Bia, the meat factories and other industry representatives, all welcomed the scale of the plan’s ambitions, though urging caution on ensuring that production qualities were kept high.

However, Eddie Punch said that farmers need to be wary of factory-driven agendas. People should pause to reflect on what has driven high prices this year, he said, warning that flooding the market with an extra 40% of beef via an expansion of the suckler herd would drive down the price per kilo.

“At the start of 2011, I predicted that beef prices could go as high as €4/kg and this was based on a careful analysis of supply factors. While increased world market prices are an important sign that the long-term price trend is upwards, Irish farmers will only capitalise on this provided that Irish cattle supplies remain tight,” said Eddie Punch.

“If beef output in this country is to expand, then factories and retailers need to demonstrate first that beef prices can be sustained at above €4/kg on an ongoing basis. If this is delivered then there will be no need to go interfering with artificial coupled subsidies.”