News this week that there are 58,000 fewer cattle in the system as of 1 May in the near-ready for the factory category between 24 and 36 months of age suggests that the glut of cattle in the second half of this year will not be as bad as feared. This is, however, just one part of the story.
Other factors mean that overall, there will be an extra 50,000 to 80,000 extra cattle slaughtered in 2016, according to usually reliable Bord Bia estimates. With the overall kill up to last weekend running just 15,000 ahead of the same period last year, we can conclude that between 35,000 and 65,000 extra cattle are still in the system compared with last year.
If the numbers in the 24- to 36-month are down by 58,000, how come there are so many extra cattle in the system with the factory the likely destination? The answer lies in exports of live cattle, or absence of them, in 2015 and into 2016.
Live exports
In 2015, over 60,000 fewer cattle were exported live, a fall of 25% on the year before. Almost half of this was caused by loss of weanling sales to the continent and store cattle sales to Northern Ireland, which also bought less finished cattle, down a fifth on the year before. Calf sales also fell substantially, with the loss of the Belgian market because of disease control rules prohibiting the import of Irish calves.
So far this year, the fall in live exports has continued at the same rate of 25% or, in cattle number terms, just over 12,000 head. Some markets have collapsed, in particular Northern Ireland and Britain, which are down 12,000 and 3,000 head respectively. This is due to a combination of factors including the closing of the price gap between Ireland and the UK, the fall in the value of sterling since the start of the year and the ongoing labelling issue. Other notable fallers in 2016 so far are the Netherlands (predominantly a calf export destination), which is down 15,000 head, and France, down 2,500 head.
There have been gains and successes elsewhere. Sales to Spain are up almost 4,000 head this year so far, and Italy is up 2,000. The clearance for sales to Turkey to commence should give the live exports sector a boost, though transport arrangements remain to be finalised.
While the 24- to 36-month pool of cattle is shrinking, the 12- to 24-month pool is up a massive 162,000.
There are further factors that need to be contemplated when assessing the likely impact of 58,000 fewer cattle in the 24- to 36-month age category. The young bull kill so far in 2016 is running 25,000 ahead of last year or around 1,000 per week. While we might expect a fall-off in young bull numbers in the summer months, the reality is that these go into the slaughter system under 24 months. While the 24- to 36-month pool of cattle is shrinking, the 12- to 24-month pool is up a massive 162,000.
A further feature of the beef cattle herd at present is that as well as the extra 133,000 extra calves born in 2015 on the back of dairy industry expansion, the number of calves that were sired by either Angus or Hereford bulls was up by 85,247 head. We can expect many of these born in the first quarter of 2015 to be coming ready for slaughter later this year. These breeds mature early, with most heifers and many of the steers ready for the factory well before they reach 24 months.
Overall numbers to factories on the rise
The fact that there are 58,000 fewer cattle on farm at 1 May in the 24- to 36-month category tells us that there will be fewer traditional beef steers and heifers in the system in the months ahead. However, there are other equally important factors to keep in mind when assessing the pool of cattle available to factories. The weak state of live exports, particularly to NI for big forward cattle, is of particular concern, as is the variable weanling trade.
Also, the move to kill cattle earlier with more Angus and Hereford cattle in the system means we have to take equal account of the numbers on farm in the growing 12- to 24-month age category. Bord Bia’s forecast for an extra 50,000 to 80,000 cattle going into factories in 2016 is unlikely to be far off.
A bigger beef kill in the factories need not be a bad thing – in fact, it can be positive. The additional cost of processing an extra few thousand cattle is small as the greater the throughput, the lower the factory overheads and unit production cost. The problem lies in finding markets for the additional stock and the volatility of farmgate prices when a few extra numbers are slaughtered. This rightly scares farmers.
However, the factories’ trade association, MII, launched an ambitious plan this week to grow lamb numbers by a million annually. If they can show the same ambition in developing beef markets, assisted by Government in securing access, particularly in the cases of China and the US, then more cattle can be a positive rather than a negative that collapses the market.
A further strength of the Irish beef herd is the growing availability of Angus and Hereford cattle. Most factories will say there is growing demand from their customers and several stall holders in the Rungis market in Paris this week confirmed an interest in Angus and Hereford for their top restaurant customers.