Sell early to beat year end rush for the last premia
Any animals approaching slaughter weight will be bundled out the door to qualify for the last of the slaughter premium towards the end of the year, even though sellers may lose out, if the factories respond with a price cut in the face of over-supply.
Live export market turbulence is on the cards, too, depending largely on what different decoupling options are chosen by the Member States which buy live cattle from Ireland. (France, the Netherlands, Spain and Italy are almost certain to keep some cattle premia coupled.) For some member states, decoupling will make imported Irish cattle unattractive from New Year 2005.
So the final months will offer the last high-priced opportunity to send cattle to some destinations.
Another class of cattle hitting the autumn market in increasing numbers will be the culled suckler cow, before her price falls, when the Suckler Cow Premium disappears in the new year.
Liam Dunne of Teagasc warns cattle farmers to expect a complex 2004 market with unusual demand patterns, cattle price differentials and new trade trends for specific animal types.
In other words, more of the same for farmers who have been through the 1996 BSE scare, Agenda 2000, the one-month change in beef premium ages, the second BSE crisis in autumn 2000, the collapse of the Third Countries trade, foot and mouth in 2001, purchase for destruction schemes, competition from South America, the SBP overshoot, and the recent EU beef market recovery.
For the farmer looking to buy cattle this year, things will be just as topsy turvy.
In 2004, birth certs must be closely scrutinised. Animals would have to be born before May 2003 to be eligible for the last 21-month premium on offer. Animals would have to be born before June 2004 to be eligible for the nine month SBP.
Since the calves born in 2004 cannot collect the second steer premium, some of these may be entered for the higher value bull premium.
Overall, Liam Dunne predicts calf costs are likely to remain high in 2004, and they could even increase, as cattle farmers undertake a final numbers push to maximise their last year of premiums. The price of calves ineligible for the nine-month SBP may also be supported in 2004 by the veal market, since the supply of calves for veal in Holland and Italy will still be constrained by the premium system.
But overall, Liam Dunne says, this year could bring some of the lowest earnings since 1999 for the Irish cattle sector. So buying too dear, or selling too cheap, would make 2004 a disastrous year for a cattle farmer.
Assuming farmers don’t get the usual 80% advance pay-out of premia in the autumn of 2004, he says, there could be a reduction in annual premia revenue of 80/ha (because 40% won’t be paid before New Year, 2005). He predicts a reduction in the value of sales also, bringing total cattle earnings down 15%, compared to 2003.
He is taking into account concentrate feed costs increasing, due to extra feeding for earlier marketing of animals before year end and dearer feed ingredients after the drought in continental EU in 2003.
