Processors point to inefficient farms

Beef processors have said high prices for cattle, feed and fertiliser, and lack of efficiency progress, are the reasons why record beef prices of the past few years did not translate into record farmer profits.

Meat Industry Ireland (MII), on behalf of processors, said the future for Irish beef and the suckler herd is fundamentally sound, but farm profitability challenges need to be addressed.

MII has confirmed that members will exercise further flexibility on carcase weights up to next April, in response to concerns about heavy carcases, which account for a small proportion of overall cattle output. “Weight flexibilities will be dealt with on a plant-by-plant basis, and producers of heavy animals should engage early and directly with processors to establish the opportunity and best timing for marketing such animals.”

Recognising the need to avoid a return to more seasonal, solely grass-based production, which would undermine processors’ ability to service high-value European fresh beef customers, MII said greater use of contracts was the most appropriate method in the shorter term of providing some guarantee to winter finishers.

“Companies are committed to working closely with their supply base to outline the various types of contracts that may be available,” said MII, which also proposed that farmers, processors, feed mills and banks get together to look at possible ways to reduce risks involved in winter finishing.

Last week’s press statement from processors confirmed that carcases up to 380kg are desired for premium markets, but noted that market outlets continue for heavier carcases, and carcases up to 400kg are not being penalised.

It said MII members are committed to improving their remittance documents to provide further information and clarity, including factors which determine the price paid. “Clearly, this will help to identify the benefits of achieving target specifications, and the cost of not doing so.

“The structure and format of the current remittance documents vary across members, with some documents providing more information than others.

The statement, issued by MII chairman Ciaran Fitzgerald, was a response to the Dowling (Beef to 2020) Report to Minister Coveney of last June. It predicts that MII members will export more than €2 billion in 2014, compared to an estimated €1.9m last year, with a 15% output volume increase expected to more than cancel out prices weakening 12% this year.

“While producers are understandably concerned by weaker prices, we must remember that overall returns have increased by 40% in the period 2009 to 2013. Adoption of the technologies recommended by, in particular, Teagasc and the ICBF, would help in delivering a more efficient and profitable beef farming sector into the future.”

MII called for a focus on the positive:

* Competitive marketing and production advantage due to climatic suitability for grass-based beef.

* Beef consumption and demand should recover in Europe, as countries emerge from recession.

* Significant effort by processors, Bord Bia and the Department of Agriculture in opening up new markets for Irish beef.

* Longer-term l population growth and protein demand.

* Strong quality and sustainability credentials (BLQAS and Carbon Footprint audits).

* Technological developments to improve farm output, efficiency and margin.