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Price cuts put beef’s future in jeopardy

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Beef finishers have reeled after a 40ct/kg drop from beef prices in the last three weeks, taking €140 off the value of an average steer or heifer.

The price cuts come as Teagasc will today detail the impact of staggering increases in input prices this year, which will take winter treatment costs to over €6/kg.

From a point where base beef prices appeared to have stabilized around the €5.40/kg mark just three weeks ago, mills were trading at €5.00-5.10/kg yesterday, with some reports of even lower prices were offered.

While Bord Bia says consumer demand remains resilient, particularly for beef production, supermarket sales are proving more difficult amid price hikes.

“Higher prices are causing difficulties for many consumers who are generally facing inflationary pressures on their household spending and this has prompted some of our European customers to focus more on other proteins such as pork and poultry which remain more competitively priced,” it said it.

Farmers have reacted furiously to the price cuts, with Brendan Golden, chairman of IFA Livestock, saying it is important beef prices remain high and reflect the reality of production costs on farms if normal supply patterns are to be maintained.

“Beef farmers will not and cannot be expected to take the risks associated with rearing cattle for the winter without making firm commitments to high beef prices,” he said.

Despite attempts by factories to offer lower offers, Golden claimed strong opposition from farmers was getting prices paid up to 15 cents/kg over offers.

Meanwhile, at Teagasc’s Beef Open Day in Grange today, researchers will detail the startling impact of increases in input prices on beef production costs, with cost increases estimated at nearly 40 percent.

While the analysis assumes farmers will buy the same or a similar amount of inputs/services as in 2021, despite strong evidence that farmers have significantly reduced spending, the numbers question the viability of many beef companies if the Beef prices do not rise significantly.

Teagasc estimates that flour prices will be €400/ton in 2022, contractor fees will increase by 25 percent, while fertilizer prices will be 2.5 times higher on average.

Production costs increase to €4.95/kg for dairy calf and fattening farmers, €4.92/kg for dairy calf breeders to weaners and an incredible €6.12/kg for winter fattening farms.

Teagasc director Prof Frank O’Mara said the increase in input costs that became apparent towards the end of 2021 accelerated in 2022. “It remains to be seen whether these sharp increases in input costs will be adequately covered by the current significant increase in beef prices received by farmers.

“Analysis by our Rural Economics team shows that agricultural supports, particularly for suckler cow farms, are critical to the income of family cattle ranches.”

Prof O’Mara said the rapid escalation in both input and beef prices over the past 12 months has raised many questions about what this means for our blueprint system and for farm incomes in Ireland.

Of the production systems analyzed, Teagasc said the net profit margin per hectare was greatest for systems that finished at the end of the “second” grazing season.

Teagasc researchers said that the 21-month weaning-to-beef system benefits from high beef performance and a high proportion of pasture grass in the total feed budget (compared to the other weaning-to-beef systems), and is also less sensitive to concentrates and fertilizer prices.

However, they also highlighted that increasing the weaning price by 50c/kg changes the profitability in such a way that the calf-to-weaning system is not significantly less profitable than the calf-to-weaning systems, but is the most profitable.

For dairy calf-to-beef systems, profitability was again highest for early slaughter systems, with the 20-month slaughter system being the most profitable overall with a net margin of €948/ha.

https://www.independent.ie/business/farming/beef/beef-trade/slashed-prices-call-into-question-the-future-of-beef-41813100.html Price cuts put beef’s future in jeopardy

Fry Electronics Team

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