Hard times in beef threaten entire farm and food sector

When you’re on the way to going broke, injunctions forbidding you from protesting at beef processing factories are not your biggest worry.

Hard times in beef threaten entire farm and food sector

When you’re on the way to going broke, injunctions forbidding you from protesting at beef processing factories are not your biggest worry.

That’s the likely explanation for farmers returning to factory gates last Sunday night, and to even more factories Monday evening, after the High Court granted injunctions to processors to stop protestors from blocking the entry and exit of lorries at their facilities.

For a farmer finishing 80 cattle per year, the drop in beef prices this year could easily reduce profits by €6,000.

That has probably pulled the best economic performing beef farms into loss-making territory.

Many of them are full-time beef farmers, depending solely on it for a living. They are less likely than the part-time farmers, who make up the majority of beef farmers, to run a farm without profit.

Beef and suckler farms on average do not earn a fair return for the amount of time invested, nor for the land tied up. Now, even the more efficient, bigger scale beef farmers face medium to longer-term implications of shrinking net worth, terminal financial illness, and no future in the business for the next generation. That is why they are at beef factory gates.

Without funds to improve facilities or replace machinery, reseed land, or maintain drains, there is no future.

The economic rot accelerates when farmers start skimping on lime and fertiliser.

That may be the future for up to 100,000 of our 135,000 farms. Hard times for them would set back the country’s entire farm and food economy.

Agriculture Minister Michael Creed might point to the Beef Exceptional Aid Measure (BEAM), now open for applications until September 8, which will inject up to €100m into beef farms.

However, farmers availing of it must reduce their herds by about 5% between this year and next year.

That is likely to bring a lot of extra beef or live cattle into an already depressed beef and cattle market, and to drive prices down further.

The likelihood of a no-deal Brexit of course hangs over everything, threatening to disastrously disrupt the trade for half of the beef produced in Ireland, due to tariffs that the UK would impose, and sterling depreciation.

Two months before Brexit is the worst possible time for beef farmers to protest, but they probably feel they have little left to lose. They may have their eye on the dairy sector, where processors say they are subsidising the milk price for farmers, and hope for similar mercy among beef processors. Beef processors might say such generosity is well and good for farmer co-operatives. However, the dairy co-ops are just as hard-headed in business dealings with their members as privately owned beef operations are with beef farmers. They have been able to perform well, coping with a huge expansion in Irish milk production, while paying dairy farmers acceptable incomes.

There is no such leeway evident in the beef business.

Processors say the market is extremely challenging, so farmers have to be happy with the price offered. There seems to be no possibility of them helping out the farmers financially.

There seems to be no possibility of them even relaxing their policy of out-of-specification penalties. For example, farmers are penalised for exceeding a stipulated number of farm-to-farm cattle moves, and a stipulated residency period, even though ICOS, the Livestock Auctioneers Association in England, and the Institute of auctioneers and appraisers in Scotland say their research showed most of the big beef buyers in the UK don’t demand these stipulations.

Even though farmers supplying them with beef cattle say they are going out of business, there has been no offer by Irish processors to ease these stipulations.

The no-leeway message therefore from processors seems to be if beef farmers can’t survive in this market, they should give up. Do processors have alternative plans to find their raw material, rather than the current system? If not, perhaps they should offer more to farmers than was on the table in the recent beef talks.

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