The scale of losses is starting to hit beef farms hard.
This week’s beef quotes have steadied at €3.40/kg, but are still a long way off what is required to clear bills on drystock farms.
There is a real risk that the current issues in the sector will have a lasting negative impact on beef producers, with some suckler farmers contemplating letting stock bulls back out, things have got so bad.
There is a chink of light entering the market. With China up and running again, demand is expected to increase, with factories already lining up stock suitable for the Chinese market.
The reopening of fast food chains this week has also returned some life to a very dull trade.
Credit squeeze
There is also a credit issue bubbling under the surface. Many co-ops and merchants are reporting that money is slow coming in this spring. Ollie Ryan from Midland Veterinary Group in Tullamore told the Irish Farmers Journal:“We’re trying to work with farmers as much as we can and, in the majority of cases, we know we will get accounts cleared but it’s hard to explain that to our suppliers.”
One farmer who spoke to the Irish Farmers Journal said the contractor was top of the list to pay for last year’s bill to make sure silage can be cut again this year.
Another suckler farmer said he has changed his fertiliser supplier as his previous supplier won’t deliver until last year’s bill is paid.
“We never got to clear things after the drought of 2018. Feed costs spiralled that year and we were hoping for a good beef price in 2019 to take us back up but that never happened. At some point were going to have to say stop,” he explained.
Beef prices
Slaughtering cattle at €3.40/kg is a tough pill to swallow, especially for winter finishers who would have invested heavily around the store cattle rings last autumn.
An Irish Farmers Journal analysis shows that winter finishers are currently losing close to €250/head without land, labour or fixed costs included based on store cattle bought last autumn.
The analysis looked at buying a Charolais-cross steer at 550kg and selling this week at a base price of €3.40/kg.
The analysis is based on purchasing a 550kg steer for €2.30/kg in January 2020 for €1,265. Add on €336 for feed costs, €10 for health costs and €50 for haulage, commission and factory stoppages and the total costs come to €1,661, without any labour or fixed costs included.
If the same steer was slaughtered last week at 700kg and killed out at 55%, that’s a carcase of 385kg.
At a base price of €3.40/kg, the steer comes into €1,432, losing €229.
On Tullamore Farm, the first of the 2020 under-16-month bulls with a disappointing cheque coming back in the post.
The five bulls were killed at an average age of 14 months and 27 days and averaged 382kg carcase weight.
Three bulls graded a U-, with two bulls grading a U= and all five were 3= or greater on fat. They came into €1,390/head each.
The same bulls killed in 2019 would have grossed €1,581 each and in 2018 reached €1,665 each.
That’s a drop of €275/head inside 24 months.
Meal price in 2018 was €270/t and is currently €271/t so costs are similar. It’s a direct hit income of close to €15,000 for the farm and calls into question the economics of any finishing system.
Cashflow
It’s always a tough time of year on beef farms in terms of cashflow. Drystock farms depend entirely on support payments to stay in business. The majority of these payment arrive in bank accounts from September to December and generally don’t spend long in farmers' accounts.
Bills are paid, and conacre, contractor, vet and meal bills are generally taken care of. Springtime cash depends on cattle sales and beef sales, many of which are stagnant at the moment.
Factories are running below capacity due to COVID-19 implications for beef demand.
Any marts that are able to open to facilitate sales are running at about 15-20% of capacity for this time of year.
This has implications on two fronts:
Farmers unable to sell in the normal way are devoid of income. When marts do reopen, we could see a massive offloading of stock that were held up during the restrictions. The current mart trade is holding well with grass buyers but this peak is usually shortlived for April and early May each year.
A quieter than usual lairage area prior to a weanling sale at Carrigallen Mart.
Support payment
Beef farmers income come from three sources: off-farm income, support payments and finished animals or cattle sales.
At the moment, both off-farm income and the finished cattle market is failing.
There is only one option and that’s an emergency support payment to underpin farming family livelihoods.
We’ve seen exceptional measure payments in the past in the form of a BEAM scheme payment. Speaking to farmers on the ground this week a BEAM 2 is needed, and needed fast.
Read more
New Bord Bia climate credit scheme for farmers
Farm organisations unimpressed with Commission supports
Is the Agriculture Commissioner delivering?
The scale of losses is starting to hit beef farms hard.
This week’s beef quotes have steadied at €3.40/kg, but are still a long way off what is required to clear bills on drystock farms.
There is a real risk that the current issues in the sector will have a lasting negative impact on beef producers, with some suckler farmers contemplating letting stock bulls back out, things have got so bad.
There is a chink of light entering the market. With China up and running again, demand is expected to increase, with factories already lining up stock suitable for the Chinese market.
The reopening of fast food chains this week has also returned some life to a very dull trade.
Credit squeeze
There is also a credit issue bubbling under the surface. Many co-ops and merchants are reporting that money is slow coming in this spring. Ollie Ryan from Midland Veterinary Group in Tullamore told the Irish Farmers Journal:“We’re trying to work with farmers as much as we can and, in the majority of cases, we know we will get accounts cleared but it’s hard to explain that to our suppliers.”
One farmer who spoke to the Irish Farmers Journal said the contractor was top of the list to pay for last year’s bill to make sure silage can be cut again this year.
Another suckler farmer said he has changed his fertiliser supplier as his previous supplier won’t deliver until last year’s bill is paid.
“We never got to clear things after the drought of 2018. Feed costs spiralled that year and we were hoping for a good beef price in 2019 to take us back up but that never happened. At some point were going to have to say stop,” he explained.
Beef prices
Slaughtering cattle at €3.40/kg is a tough pill to swallow, especially for winter finishers who would have invested heavily around the store cattle rings last autumn.
An Irish Farmers Journal analysis shows that winter finishers are currently losing close to €250/head without land, labour or fixed costs included based on store cattle bought last autumn.
The analysis looked at buying a Charolais-cross steer at 550kg and selling this week at a base price of €3.40/kg.
The analysis is based on purchasing a 550kg steer for €2.30/kg in January 2020 for €1,265. Add on €336 for feed costs, €10 for health costs and €50 for haulage, commission and factory stoppages and the total costs come to €1,661, without any labour or fixed costs included.
If the same steer was slaughtered last week at 700kg and killed out at 55%, that’s a carcase of 385kg.
At a base price of €3.40/kg, the steer comes into €1,432, losing €229.
On Tullamore Farm, the first of the 2020 under-16-month bulls with a disappointing cheque coming back in the post.
The five bulls were killed at an average age of 14 months and 27 days and averaged 382kg carcase weight.
Three bulls graded a U-, with two bulls grading a U= and all five were 3= or greater on fat. They came into €1,390/head each.
The same bulls killed in 2019 would have grossed €1,581 each and in 2018 reached €1,665 each.
That’s a drop of €275/head inside 24 months.
Meal price in 2018 was €270/t and is currently €271/t so costs are similar. It’s a direct hit income of close to €15,000 for the farm and calls into question the economics of any finishing system.
Cashflow
It’s always a tough time of year on beef farms in terms of cashflow. Drystock farms depend entirely on support payments to stay in business. The majority of these payment arrive in bank accounts from September to December and generally don’t spend long in farmers' accounts.
Bills are paid, and conacre, contractor, vet and meal bills are generally taken care of. Springtime cash depends on cattle sales and beef sales, many of which are stagnant at the moment.
Factories are running below capacity due to COVID-19 implications for beef demand.
Any marts that are able to open to facilitate sales are running at about 15-20% of capacity for this time of year.
This has implications on two fronts:
Farmers unable to sell in the normal way are devoid of income. When marts do reopen, we could see a massive offloading of stock that were held up during the restrictions. The current mart trade is holding well with grass buyers but this peak is usually shortlived for April and early May each year.
A quieter than usual lairage area prior to a weanling sale at Carrigallen Mart.
Support payment
Beef farmers income come from three sources: off-farm income, support payments and finished animals or cattle sales.
At the moment, both off-farm income and the finished cattle market is failing.
There is only one option and that’s an emergency support payment to underpin farming family livelihoods.
We’ve seen exceptional measure payments in the past in the form of a BEAM scheme payment. Speaking to farmers on the ground this week a BEAM 2 is needed, and needed fast.
Read more
New Bord Bia climate credit scheme for farmers
Farm organisations unimpressed with Commission supports
Is the Agriculture Commissioner delivering?
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