Opinion

Why can’t the beef sector consider fixed-price supply contracts?

The last two years have seen the milk sector monopolise the issue of volatility and the need to come up with some form of viable response to this undoubted challenge.

For their part, the dairy processors are starting to offer realistic fixed-price supply contracts, covering up to three years’ milk output. Admittedly, not all the milk produced by individual farmer-suppliers can be covered by these new contract offers.

But the principle is a strong one and this evolving engagement between processors and primary producers can be regarded as a genuine attempt to build a realistic degree of stability within the dairy sector for the future.

But, hold on a minute, surely the beef sector is as exposed to the ravages of volatility as is the case with its dairy counterpart. And, this being so, why can’t the factories offer long-term supply contracts to their farmer suppliers?

I know the beef industry has played around with calf-to-beef systems in the past.

But, surely now, it’s time to look beyond this and lay the foundations for a more constructive approach to contract farming alternatives for the future.

And, in my opinion, it’s a combination of young farmers and dairy beef production options that will pave the way for developments of this nature.

The reality is that Ireland is home to 300,000 more dairy cows than would have been the case prior to the ending of milk quotas. By my reckoning, this means that there could soon be in the region of 200,000 dairy-bred bulls and beef-bred calves coming through the system on an annual basis, additional to what would have been the case prior to 2015.

This is an amazing national resource, which must be made full use of. One way of doing this would be to encourage young farmers to commit to contract rearing agreements with the factories.

I don’t care if the deal is based on a fixed contract price for the finished animal or the farmers in question being paid an agreed daily management fee.    

Either way, there would be sufficient scope built-in so as to reward efficiency and the attainment of enhanced performance levels.

ABP has looked at options of this nature, tying in young people with Aberdeen Angus production systems. But we need to see a lot more of this. The reality remains that young people need to secure a foothold within the farming industry. Contract beef production could be one way of delivering this for them.

Comments

Please be considerate of others when commenting. All comments posted are subject to our commenting policy. Comments violating this policy will be removed without notice.