Outlook for dairy is bright but tougher times for beef

There are mere weeks to go to the post-quota age and we can look forward to it with the optimism that comes with calm rational calculation and trust in our technical excellence.

ICMSA has always disliked the ‘white gold’ hype indulged in by some commentators — and we’ve always noted how few farmers are to be found in these excited ranks. We prefer to trust in the internationally acknowledged standard of our milk and after that to make haste slowly, acting prudently, always mindful of the fact it is the farmer who has to invest the money necessary to expand. And it is the farmer — and the farmer alone — whose income is largely dictated by milk price.

The continuing resurgence of international dairy markets must also be noted. Dutch dairy quotations are rebounding strongly, with butter/SMP up 21% since their lowest point in December. The drought conditions affecting part of New Zealand’s production will feed in to a rebalancing of global supply and demand. These, taken alongside the reductions in European supply due to superlevy, are all contributing to an increase in confidence regarding our milk price for the balance of 2015.

The European Commission’s decision to permit the payment of superlevy over a three-year period, at zero interest, is a significant concession. We now need to see co-ops contacting those farmers who have already had monies deducted to offer them the choice of either continuing with the payment of the fine upfront or the co-op repaying two-thirds of the monies deducted back to the farmer who can then pay the balance owed over the next two years at zero interest.

As the dairy outlook brightens, the beef situation remains overcast at best; it may even be darkening. Reports that the Department of Agriculture and Food and Teagasc are in the process of performing a U-turn on the commitment to review the QPS Grid represents an unacceptable backtracking, reneging on what was agreed at the Beef Forum Meeting on November 13, 2013. It’s worth recalling the agreed statement made on that occasion: “The QPS system will be reviewed, with the assistance of Teagasc, with a view, in particular, to providing a more simple and transparent system, before the middle of 2015.”

If the recent reports are accurate, then the credibility of the Beef Forum is called into question and we are left without any means of addressing the underlying problems that undoubtedly persist within the beef sector.

By way of illustrating the nature and extent of those problems, ICMSA has recently calculated that the price differentials between Ireland and Britain on an R3 steer has now reached a point where the Irish farmer is losing over €300 per animal based on an average 350kg steer carcase, a difference of 21% between our two markets. Similar differences exist between U and O grades. We’re sending over 50% of our exports to the UK market and the exchange rate has turned decisively in our favour. The question must be asked: Why is our beef sector so manifestly unable to deliver any proportionate return on beef to the farmers? Since it was first mooted, we have identified numerous systematic defects in the QPS grid; the department and Teagasc must see that the Grid is not trusted and requires, at the very least, an absolutely fundamental review. They agreed to do that and we must insist that they deliver on what was freely agreed.

We welcome the opening of the new GLAS scheme but have reservations about the ability of those farming intensively — operating small farms with high inputs — to join the scheme. From an environmental point of view, as well as from the perspective of those farmers’ incomes, it’s vital that the terms and conditions of GLAS allow for their participation.


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