Marts: the challenges that lie ahead

Almost everyone loves a big cattle or sheep sale – more stock to choose from, more buyers turn up at the ring, more commissions.

Recent years have, therefore, been pretty decent for marts. Cattle throughput rose in the three years to 2017, on the back of dairy expansion.

But the 2018 drought hit the marts, as it did so much else. Just over 1,789,000 cattle went through marts, down 5%. The clearance rate fell marginally, with 155,000 animals unsold.

Throughput of sheep fell by 4.3% to 1.44m head. The details will be published next month in the Department of Agriculture’s AIM Bovine Statistical Report 2018.

The only consolation for marts is that farm-to-farm cattle movements also fell 5%, to just over 1.25m

Lower throughput will have directly hit marts’ 2018 turnover. It will hit profits too, but some marts are co-ops and their farmer committees are more anxious to provide a low-cost, local service than make a profit. Private marts are forced to compete.

The only consolation for marts is that farm-to-farm cattle movements also fell 5%, to just over 1.25m. Because the real challenge ahead for marts is rising farm-to-farm and farm-to-factory sales.

They, too, were growing until 2018, helped by online ads and smartphones. Many dairy calves are bought off the land for export. Their value is low, relative to handling costs, and many dairy farmers won’t travel to a sale with a small number of low-value animals in the busy spring. Marts have responded by offering the collection of calves.

All marts are worried about a fall in suckler cow numbers

The QPS and movement rules have hurt marts badly, depriving them of the most valuable fatstock that support good commissions.

Better weather could see throughput recover in 2019 – marts have already handled higher numbers of calves this spring, even if commissions varied from small to very small, in cases €3 per head. All marts are worried about a fall in suckler cow numbers. They would prefer to sell stores or suckler weanlings at over €1,000 per head than calves at €30.

Marts’ costs are rising too. Insurance costs to the country’s 84 marts amount to an estimated €371m in premiums – €1 for every animal sold. Marts also face rising costs on health and safety and with animal welfare. None of these generate additional turnover or pay bills.

In January, Mountrath Mart closed after 51 years, shocking farmers in Co Laois and further afield.

Its committee cited a reduction in the number of animals being traded through the mart, coupled with rising insurance premiums, regulatory requirements and general cost increases.

Tipperary’s Carrick-on-Suir Mart could not re-open following a devastating fire in April 2018.

It was more like a community than just a cold business and that’s the part that really hurts, but economics is economics

It said escalating insurance costs, coupled with the increased cost required for ongoing regulations were behind the decision to remain closed.

“It was more like a community than just a cold business and that’s the part that really hurts, but economics is economics,” manager John Curran told the Irish Farmers Journal at the time.

Castleblayney Mart in Co Monaghan, collapsed in April 2018 after EP Nugent Ltd, the company running sales at the mart, lost its auctioneering licence in February 2018 and subsequently went into liquidation. Legal proceedings are ongoing.

Only Ireland and the UK have large numbers of marts. France, Holland, Spain and Italy have just half a dozen significant marts between them. As long as there are small family farms, there will be support for local marts.

Marts would rather have 10 farmer buyers around the ring than three dealers

Rationalisation doesn’t necessarily help remaining marts. Where marts have closed over the years, for example in Leinster, many farmers asked a dealer to buy for them and sent finished cattle to the factory.

Marts would rather have 10 farmer buyers around the ring than three dealers. Dealers can control the trade and, in the past have been known to wrangle significant credit, in some cases tens of thousands of euro. Then it’s the mart manager who worries.

“Dealers come into the marts for credit – and use that to buy stock off the land,” one manager told the Irish Farmers Journal. “A forensic accountant would close us down.”

With eight marts in Co Kerry, competition is ultra-keen, according to manager of Tralee Co-op Mart, Philip Healy.

“Up the country, stock just come into a mart. We have to go out and canvas for stock.”

The mart provides transport to marts for dairy calves. “Also, I can go out on farm to look at calves and indicate a price to the farmer.

“We still have a lot of farmers coming to sales to buy their own cattle for grass. If a farmer wants to buy stock, they need to be at the sale. You can’t buy over the phone,” he says.

“This year, marts got an upturn in calf numbers – because they were a difficult trade. Exporters came to the marts when prices were low. But when prices recover, exporters go straight to farms – trying to buy them cheaper.

“A lot of marts are worried that they will be left trading the leftovers of the dairy stock,” he says.

It’s hard for marts to cover costs selling dairy calves.

“Time and history have proven the mart is the best place to sell animals. Plenty of fellows have got stung selling off the farm – but it’s the farmer’s choice.”

Tralee Mart moved to the edge of town 30 years ago.

“The committee had foresight – they put up warehouses. There are now eight businesses operating on the site, generating rental income. Not all marts are as lucky.”

About 20% of marts in Ireland benefit from rental income from their sites.

The most important factor for Healy is better beef prices.

“If farmers are not making money then marts are in trouble, too.”

“Farm-to-farm sales and farm-to-factory sales are steadily chipping away at marts,” says Ray Doyle, ICOS marts executive. Recent rule changes have generally been negative, he says.

“Horned cattle can’t be sold in the ring. The bullock with one tag can only go to the factory. From June, it will be the same for a lamb with one EID tag. This is all above and beyond EU rules and a significant restriction.

“QPS killed off many fatstock sales. After Brucellosis rules were eased, the number of cull cows trebled in some marts. That’s because it’s a free market, not distorted by QPS. QPS is anti-competitive.”

He is now opposing any move towards categorising cattle herds on TB.

“It would devalue stock. I accept that if TB was eradicated that would free up cattle movements.”

“There will be no point lamenting about livestock marts after they’re gone,” Doyle says. “Marts need to be supported so they can remain the centre of the community. Often, the mart is now the only business in a county town.”

What opportunities are ahead?

“Online selling by marts, where buyers bid over their smartphones is a work in progress,” he says. “Dairy farmers now buy on an EBI spec, not on appearance, so they could buy from an online sale. Ideally the animals would enter the mart ring, but a herd sale can be done on farm. It will then spread to the beef side. The predictability of genetics through ICBF is getting more and more accurate.”

Co-op marts have little interest in rationalisation, Doyle says.

“Farmers want the local service. Marts are more used to competing than co-operating.”

Central Auctions is the model: three marts with one team going from centre to centre on the day. “They have work to do for five days of the week.”

However, the model is now 11 years old and has not been repeated.

Doyle is hopeful that 2019 will be better for marts than 2018.

“We’re now seeing good positive numbers, throughput is up and prices are good.”