‘Over €6/kg needed to breakeven for winter finishers’ – Teagasc

Winter finishers are staring into mounting losses as rising costs of production are coupled with a refusal by factories to increase quotes for winter finished beef.

Over 300 farmers attended Tuesday night’s IFA beef crisis meeting in Portlaoise to vent their anger.

IFA south Leinster chair Francie Gorman opened the meeting telling the top table that farmers were demanding to know why Irish beef is lagging behind by 50c/kg on the Bord Bia market tracker.

The meeting heard from Teagasc beef specialist Aidan Murray who presented Teagasc budgets that made for some grim reading.

Teagasc estimates, based on the current store trade, that winter finishers need to get €5.84/kg just to breakeven on a continental animal purchased at 530kg in October. A €100 margin added in pushes the price required to over €6.

Murray outlined that silage costs have risen to €50/t and meal costs are coming in at €420/t. “Even the lower-cost systems feeding high-quality silage and less meal will find it very hard to make ends meet this winter given the cost of silage,” he said.

Rising costs

Paul Nolan, Dawn Meats, told the meeting that processors have seen huge increases in transport costs and refrigeration costs. This has been coupled with a trading down in beef cuts by consumers from steak cuts to lower-value products like diced and minced meat.

Nolan did, however, point to the changing situation over the last week with cattle supplies being the main driver of the price.

“Finished cattle supplies are tight here and tight across Europe and I could see the price going to €5.40/kg in early 2023. “Will it hit €6/kg, I don’t think so, but who knows.”

On the current price situation, he said: “You can’t just tell a supermarket or consumer that you are putting up the price of beef, it’s not as simple as that.”

Joe Burke of Bord Bia said European consumers have maintained their spend but reduced purchase volumes and, in some cases, have opted for lower-value cuts as the current cost of living squeeze hits household food budgets. Burke also outlined how carcase weights have seen a big drop in 2022 with cow carcases 14kg lighter.

“We will likely see a contraction in the kill in 2023 with our estimates putting the 2023 at 30,000 head lower than 2022. Strong live exports in 2021 and 2022 will mean a reduced supply in 2023,” he said.

“A combination of increased store prices, meal prices, silage production costs and higher energy costs means winter finishers are looking at prices of between €5.50/kg and €6.20/kg, depending on their system” – Aidan Murray, Teagasc.

“Early in the new year, we don’t see a sufficient amount of finished cattle coming on stream to fulfil requirements. We’re being told by our finishers that they need €5.20/kg to €5.40/kg for February- and March-finished cattle and I’d be optimistic that we will hit that price based on the current supply/demand set up”– Paul Nolan, Dawn Meats.

“[IFA] will be meeting MII and all the processors next week to stress the seriousness of the situation and after that meeting, we will assess the next level of action we need to take” – Tim Cullinan, IFA president.

“The PGI application is currently being processed by the European Commission. We would hope for a positive decision in January or February 2023. We are pretty optimistic that we won’t hit any more issues and it will be granted in 2023” – Joe Burke, Bord Bia.