EU talks could determine if beef farming has a future
As a result, jobs in Irish beef factories are at stake — which will grab the attention of our politicians faster than any amount of farm organisation statements pointing out that cattle farmers here are bankrolled and kept in business by the CAP (Common Agricultural Policy).
What is at stake was illustrated by the welcome announcement of 100 new jobs last week in meat processing and consumer foods marketing at Kepak, Watergrasshill, Co Cork.
Kepak is one of the largest employers in east Co Cork, contributing about €200m annually in the local economy.
The company processes more than 300,000 cattle annually in Ireland and the UK.
Strategic decision-making and action, ambition and innovation are constantly needed to keep Ireland’s place in the global food industry.
Consumer focus and a partnership with the Musgrave Group which includes 659 stores also helped Kepak.
Their expansion at a time when cattle prices have surged to record levels is remarkable. But access to raw material could become challenging for Kepak — and for all Irish beef processors.
Rabobank is the world’s leading food and agri bank, and is renowned for its research in this area — which now points to further rationalisation of the EU beef industry being inevitable.
Getting enough cattle with the right quality at competitive prices will be the distinguishing factor for survival in the coming decade, according to the Rabobank experts.
Already, there has been a temporary reduction in the number of slaughter days per week at several beef factories across the EU.
The problem is that EU farmers are not responding to record cattle prices in the expected way — which is herd expansion and cattle supply increase. Instead, EU beef calf numbers were down 3.3% this summer, and beef cows were down 1%.
Sky-high feed costs are part of the reason, but uncertainty about their future incomes, due to reform of the CAP, and EU milk quota abolition in 2015, play a major role.
Instead of buying more beef cows, it seems that EU cattle farmers are sitting back to watch Agriculture Minister Simon Coveney and his 26 counterparts from other EU member states, plus Taoiseach Enda Kenny and his 26 counterparts, plus the European Parliament and European Commission, as they argue over the CAP for the next year.
Farmers cannot be blamed for their watching brief, because the average EU beef farmer depends on the CAP for 50% of his or her income. In Ireland, the figure is near to 100%. Particularly nervous are the more intensive cattle farmers in north-western Europe, including Ireland, who generally have a higher number of animals per acre, or who specialise in veal production, on the continent.
They depend heavily on CAP money, rather than the beef market. And they stand to be the biggest losers in CAP reform, because the European Commission wants CAP payments redistributed from current high earners to lower earners, and from older to newer member states, with 30% tied to environmental measures.
Rabobank researchers warn beef production will follow the CAP money, away from efficient producers in north-western Europe, mainly Ireland, towards generally less efficient producers in southern and central Europe.
That points towards shrinking beef processing in Ireland — at least until the 2015-2020 period, when a hoped-for 40% increase in Irish dairy cows could bring a flood of new beef raw material, but of lesser quality.
The Rabobank report says Ireland’s highly committed part-time farmers with off-farm income will slow the decline in Irish beef cattle — because they depend less on the CAP payments.
These farmers have played a vital role in the beef industry since 2003, when farmers were given the freedom to reduce production without losing out on CAP payments.
But continued beef industry progress depends on their decisions in 2014, when a new CAP is presented.
