High cereal prices will hit all
The IFA Pigs and Pigmeat Committee had an emergency meeting earlier this month to discuss the crisis triggered by higher cereal and protein prices. For the first time, protein prices reached €500 per tonne.
Pig farmers are more exposed to the animal feed market than most.
The poultry industry is a major grain user, but adjusts more rapidly, quickly reducing production and waiting for profit margins to improve.
The ability of cattle, and other ruminants, to use forages provides flexibility; although high milk yielders and finishing beef cattle require expensive grain. This winter, Ireland’s grass-growing advantages and suitability for extended grazing will have to be exploited to the maximum.
It could be a “game-changer” winter, if the grain market continues to deteriorate. There are signs the number one grain exporter, the US, with 40% of annual exports, will reduce its maize exports to a 27-year low, not just because the crop has failed due to drought, but because its own livestock industry needs the scarce supply, especially for chicken and pork production.
Just how bad the global grain market looks is reflected in the world’s leading grain exporter turning to Brazil for maize supplies. Brazilian maize is being landed cheaper on the US east coast than US corn belt maize. This is the global grain industry’s equivalent of Saudi Arabia importing oil.
The expected rebound in the US cattle herd, which is heading to its lowest level, has been postponed, because of the high feed, grain and fodder costs, and US pasture being in its worst ever condition, due to drought. US cattle ranchers would gladly swap places with Irish farmers and their waterlogged summer.
So would the Kazakhstan farmers who received hundreds of Irish pedigree cattle in recent years, as part of the oil-rich country’s bid to replace its cattle population, which disappeared when food supplies dwindled after the Soviet Union dissolved in 1991.
Now, Kazakh farmers say abnormally hot weather this year will reduce their harvest by 50% to 70%, and the country’s livestock industry may have no feed this winter.
Normally, grain shortages and high prices are good news for grass-based farming nations like Ireland and New Zealand, and bad news for competing livestock-producing countries.
But if the European harvests run into major difficulties, everyone could suffer. This week, Teagasc experts forecast that an increase of more than 20% in cereal prices this year is possible — and that would result in a 15% increase in Irish animal feed costs.
Dairy and beef farms are on course for a 25% increase in feed expenditure this year.
It is imperative that our supposed advantage as a grass-based producer be fully utilised to keep that increase to a minimum.
