Beef producers must know their costs of production
Teagasc Director Professor Gerry Boyle is quite right in highlighting the need for beef finishers to know their production costs, a point he made extremely well courtesy of his presentation to the Dáil Agriculture Committee earlier this week.
Livestock producers deserve a much better return on their investment. That is taken as read. Traditionally, finishers have responded to poorer cattle returns by paying less for stores, which only served to put more pressure on their colleagues margins further down the line.
As we now know beef producers cannot control the price they get for their finished cattle. As a result, they have no option now, but to concentrate on those costs they have control over and not the vagaries of the marketplace.
Economists continue to point out that in a decoupled scenario the lower performing farms must increase their production efficiency if they are to remain in beef. A price rise alone will not be enough to deliver a reasonable income in the current and future climates. Of even greater concern is the reality that an area based support payment system is now on the way: one which will not suit the requirements of large scale beef finishers.
However, the worrying fact remains that a significant number of livestock farmers in Ireland do not have a detailed handle on their operating cost base.
It’s extremely difficult to implement any on-farm improvement programme when the producers concerned have no idea as to what their actual starting point is.
The most obvious way round this problem comes in the shape of a benchmarking programme. It is an approach that offers a host of opportunities for farmers to gauge the efficiencies they are achieving and, thereafter, identify possible ways forward.
Beef production has become an extremely serious business. Only those producers who endeavour to improve their levels of efficiency will survive. Investing Single Farm Payment monies into a beef enterprise is not the way forward. Rather it’s case of ensuring that businesses can stand on their own two feet by generating profits purely on the back of what the market can offer. And simply worrying about the price of store cattle just won’t cut it in this context!